Will VoIP and Unified Messaging Become Value-Added Services to Enterprise Communications in the Future?

By Jiaqi Sun, ICT Research Analyst, Frost & Sullivan

Agenda

2

4

3

5

6

Introduction

Markets Overview of VoIP, UM and UC&C

Service Delivery Models

UC&C Market Forecasts

Enterprise VAS and Investment Opportunities

Conclusions

1

7 Q & A

Introduction1

Introduction

Improving Quality of Broadband Technologies Drives Uptake of Enterprise Communications

Source: CDG and Frost & Sullivan analysis

Sub-Saharan African Timeline

2G2G 2.5G2.5G 3G3G Advanced BroadbandAdvanced Broadband 3.5 G-3.9G 3.5 G-3.9G

cdmaOne, GSM, TDMA,

GPRS, EDGEUMTS, CDMA2000 1X,WCDMA

1xEV-DO,HSDPA, HSDPA

EV-DO Rev. A/BHSPA, Fibre-optic/ADSL

HSPA+

SMS Ringtones

WAPBrowsingMMS

Video MessagingVideo StreamingMusic DownloadsLocation-based Services

EnterpriseMobile TVMusic DownloadsInternet Connectivity

VoIPVideo TelephonyTriple-playm-CommerceAdvertisingSocial NetworkingUnified Communications

All-IP Digital Convergence of Voice, Broadband Access, Mobile Data, Broadcast and TV Devices

1995 2000 2002 2007-2009 2009-2011

2002 2004-2007 2008-2009 2010-2012 2013-2015

LTE,Mobile WiMAX 802.16 d/e/m....

OFDMA-based

Broadband v2

Broadband

Introduction

Key Components of UC&C Solutions

Source: Frost & Sullivan analysis

Bubble size represents level of end user adoptionSource: Frost & Sullivan analysis

Ad

op

tio

n R

ate

Low

High

Introduction Growth Maturity Decline

Shared Bundles

Mobile Access to VPN

One Number and One Bill

Fixed Voice bundles and standard plans

Pico cells

Converged Devices

Mobile Centre

FEMTOs

Mobile voice services and standard plans

Mobile APN

Closed User Groups

SaaS

BES

Block Number

Portability

Self Service Portals

Bulk SMS Premium SMS

Billing Hierarchies

Tariff Analyzers

FM Bundles

FMC

Single Wallet

Fixed data plans

Mobile data plans

These services have become commoditised and in cases

where uptake is minimal, there is a very limited likelihood for significant growth except for

mobile access to VPN

These services are increasingly becoming available and current and future end user adoption is

expected to grow

Most of these services have been launched recently

therefore operators are still trying to generate acceptance

in the market Others have failed to generate

interest in the market

Mature voice services drive VoIP, UM and Enterprise Mobility as Value-Added Services (VAS)

Mature voice services drive VoIP, UM and Enterprise Mobility as Value-Added Services (VAS)

Introduction

Fixed and Mobile Voice Services are Mature in 2011

Introduction Consumer VoIP and IM Have Evolved into Enterprise Grade UM and UC&C

VoIP+IMVoIP+IM UMUM UC&CUC&C

Source: Frost & Sullivan analysis

• Driven by cost reductions and the streamline of ICT systems, social media and fragmented legacy enterprise systems are migrating to one single unified system

• VoIP and UM are two primary components of UC&C solutions represent 85% of revenues of integrated UC&C solutions

• Conferencing and collaboration are future growth drivers

• Integration of ICT Systems with Those of Customers and Suppliers is One Critical Means for Change in the Future

Introduction

Improving Network Capacity is Key Driver and Limited Interoperability is Primary Restraint

Software-centric

communications solutions

Reducing bandwidth costs and improving

network capacity

Improvement of Work Efficiency

Outsourced Contact Centres

CAPEX and OPEX

Reductions

Source: Frost & Sullivan analysisSource: Frost & Sullivan analysis

Lack of proven case

studies

Limited interoperability

of different systems and applications

Budget Constraints

of SMEsLow awareness of unified benefits

Legacy customer premise

equipments

Drivers

Restraints

Introduction South Africa, Nigeria and Egypt are Key-Growth Markets of UC&C Solutions in Africa

Note: All figures are rounded; the base year is 2010.

Source: Frost & Sullivan analysis

Low

High

High

GDP Per Capita (Current $)

Ven

do

r M

arke

t

Rev

enu

e C

AG

R D

uri

ng

200

8-20

10 (

%)

Nigeria

Kenya South Africa

Low

0.25

0.0

0.5

3,500.0 7,000.0

Africa AverageTanzania

Vendor Market Revenues

Mauritius

Egypt

Senegal$46.1 million

$75.0 million

$14.0 million

$187.5 million

$32.2 million

$21.3 million

$9.2 million

$30.0 million

BPO and contact centres are driving the uptake of VoIP and UM solutions

Regulatory restrictions in Africa on e.g. VoIP were

the primary causes for slow adoption of UC&C

solutions

Markets Overview of VoIP, UM, and UC&C2

Markets Overview of VoIP, UM, and UC&C

VoIP and UM are Expected to Maintain Double Digits Growth in South Africa in the Next 5 Years

2015

Mark

et

Volu

me

Low

High

Introduction Growth Maturity Decline

E-mail

VoIPFax

Collaboration

Voice Mail

2010 20202005

IM

Video Conferencing

Tele-presence

Fully Integrated UC&C Solutions

Year

Source: Frost & Sullivan analysisNote: Bubble size represents revenues accruing to vendors. Solutions are not mutually exclusive

UM

VoIP CAGR 21%

UM CAGR 30%

UC&C CAGR 32%

• 100,000 VoIP Users

• 81,500 UM Licenses• 3,450

UC&C Subscribers

Markets Overview of VoIP, UM, and UC&C VoIP Product Evolution Process

Current services Anticipated services

Source: Frost & Sullivan analysis

Trend VAS in addition to VoIP include for example bundling hosted services with voice management services

2010 2012

LCR

Voice Services

Converged Voice and

Data Services

VASBundled Services

Number Portability

Carrier Pre-select

Local Loop Unbundling

Markets Overview of VoIP, UM, and UC&C Key VoIP Market Participants in South Africa in 2011

Markets Overview of VoIP, UM, and UC&C IM Becomes Central Software and Computing Devices Become Central Hardware of UC&C

Consumer IM

Enterprise IM

IM with VoIP

IM with VoIP and

VideoUM UC

1996 1999 2002 2003 2005 2009-2015

UC&C

2010-2020

Source: Frost & Sullivan analysis

• IP Telephony vendors are leading UC&C technology vendors Cisco, Avaya and Alcatel-Lucent

• Microsoft and IBM are primary vendors in the enterprise IM solutions

• Polycom, Google and HP are expected to grow their presence in the future

Markets Overview of VoIP, UM, and UC&C Key UM and UC&C Market Participants in South Africa in 2011

UC&C

Software Vendors

System Integrators

Distributors and Resellers

Hardware Vendors

Network Operators

Source: Frost & Sullivan analysis

Note: Others include Datacentrix Holdings Ltd., Spescom, UCS Group and Altech Technology Concepts

Note: All figures are rounded; the base year is 2010.Source: Frost & Sullivan analysis

Note: others include Microsoft, Mitel Network Corporation, IBM and NEC Corporation

Note: All figures are rounded; the base year is 2010.Source: Frost & Sullivan analysis

Technology Vendor Market Shares

System Integrator Market Shares

Markets Overview of VoIP, UM, and UC&C Cisco and Dimension Data Leading UC&C Market Participants in South Africa in 2010

UC&C Market Forecasts3

0.0

100.0

200.0

300.0

400.0

500.0

600.0

2009 2010 2011 2012 2013 2014 2015 2016

Year

Rev

enue

s ($

Mill

ion)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Rev

enue

Gro

wth

Rat

e (%

)

Revenues ($ Million) Revenue Growth Rate (%)

CAGR: 25.9%

UC&C Market Forecasts

UC&C System Integrator Market Revenues Forecasts in South Africa

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan analysis

0.0

50.0

100.0

150.0

200.0

250.0

2009 2010 2011 2012 2013 2014 2015 2016Year

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

Re

ve

nu

e G

row

th R

ate

(%

)

VoIP Revenues ($ Million) Unified Messaging Revenues ($ Million)

Conferecning Revenues ($ Million) Others Revenues ($ Million)

VoIP Revenue Growth Rate (%) Unified Messaging Revenue Growth Rate (%)

Conferecning Revenue Growth Rate (%) Others Revenue Growth Rate (%)

Re

ve

nu

es (

$ M

illio

n)

Note: Other revenues include tele-presence and tele-collaboration features

Growth Rates of UC&C Components

20%-40% 2011-2016

$500 million$500 million

$120 million$120

million

• VoIP is expected to remain the high growth rate (35%-40%)

• Conferencing is expected to show strong growth rate from 2013

• VoIP is expected to remain the high growth rate (35%-40%)

• Conferencing is expected to show strong growth rate from 2013

UC&C Market Forecasts

VoIP and Corporate Customers Remain Primary Revenues of UC&C Market in South Africa

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan analysis

2009 2016

2009 2016

Note: Others include tele-presence and tele-collaboration

UC&C Market Forecasts

The Public Sector is Expected to Maintain a High Growth Rate of About 30% in the Next 5 Years

Note: All figures are rounded; the base year is 2009.Source: Frost & Sullivan analysis

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2009 2010 2011 2012 2013 2014 2015 2016

Year

Rev

enu

es

($ M

illio

n)

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Rev

enu

e G

row

th R

ate

(%

)

Financial Services Sector Revenues ($ Million) Telecommunications Sector Revenues ($ Million)

Public Sector Revenues ($ Million) Other Sectors' Revenues ($ Million)

Financial Services Sector Revenue Growth Rate (%) Telecommunications Sector Revenue Growth Rate (%)

Public Sector Revenue Growth Rate (%) Other Sectors' Revenue Growth Rate (%)

Note: Other sectors’ revenues include revenues from the hospitality, healthcare, manufacturing and mining sector

UC&C Market Forecasts

Telecommunications and the Public Sectors are Primary Revenues of South African UC&C Market

2009 2016

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan analysis

• The public sector is the leading segment in the VoIP market. Retail and tourism sectors have seen strong growth between 2008 and 2010

• Financial services sector is the leading segment in the UM market. Outsourced contact centres and business services are expected to drive UM uptake in the future

Service Delivery Models4

Service Delivery Models

Managed and Hosted Services Delivery Models are Prominent in the SMEs Segment

Customer Premise Equipment

Outsourcing Services

SaaS

On-premise Off-premise

Man

agem

ent

Service Delivery Method

Hybrid

External

Internal

Hybrid

Note: * Referring to public cloud via the Internet

Clo

ud*

Co

mp

utin

g

Managed Services

Hosted Services

Managed Customer Premise Equipment

Source: Canalys and Frost & Sullivan

Service Delivery Models Cloud-based Solutions are Gaining Momentum in the Large Enterprises Segment

Note: SaaS - Software as a Service; IaaS - Infrastructure as a Service;

PaaS - Platform as a Service

Laptop

Public and Private Cloud Networks

Source: Frost & Sullivan analysis.

Service bundles of SaaS and IaaS i.e. PaaS become one of the competitive strategies in cloud computing market in Africa

Enterprise VAS and Opportunities5

Voice + SMSVoice + Messaging +

Internet

Voice + Multimedia +

Applications

Traditional Mobile

Communications

Basic Mobile

Communications

Advanced Mobile

Communications

VAS Delivery Mediums Examples

SMS/MMS Premium-rated SMS, SMS/MMS subscriptionsUSSD Airtime transfer, mobile money transferIVR Information services by dialing short-codes

Web Images, music, game and video downloading

Combinations of above mediums WebtoSMS, SMStoEmail, Voice SMSSource: Frost & Sullivan analysis

Enterprise VAS and Opportunities

VAS are Value-Enhancing Alternative Channels to Increase Customer Loyalty

Enterprise VAS and Opportunities

VoIP and UM Bundles will Become Enterprise VAS Driven by Software-Centric Systems

Note: Other enterprise VAS are mainly application-based services including mobile advertising and marketing, premium-rated SMS, FMC/telemetry services, shared bundles , and customer support services. Other consumer VAS include, among others, CUG, maps, email, and social networking applications. Source: Frost & Sullivan analysis

VoIP+ UM

• Mobility is one of the key drivers of unified communications

• By leveraging current VAS applications e.g. EmailtoIM, SMStoEmail, VoiceSMS, FaxtoEmail, mobile VoIP and UM will become the cost-effective enterprise-grade VAS

Enterprise VAS and Opportunities VoIP and UM Bundles are Expected to Become New Sources of VAS Revenues

Source: Frost & Sullivan analysis

Probability of Success

Low High

Low

High

Imp

act

on R

eve

nue

Gro

wth

If

Suc

cess

ful

Mobile payment/commerce

Mobile advertising/marketing

Telemetry services

Video calls

Mobile TV

Rate Analyzers

Bulk SMS

Tracking of mobile phones

Self-service portals

VoIP and UM

bundles

CUG

Challenges • Strategic operators in Africa such as MTN and Airtel seek new sources of revenues

• Poor network coverage on premises is a barrier for adopting mobile services by enterprises

• With extensive adoption of Smart Phones, enterprise communications become more flexible

• Smart Phones (Blackberry and iPhones) are driving the growth of data services for corporate and individual consumers

• Mobile VoIP• Mobile UM (SMStoIM,

SMStoEmail)

• Dedicated cellular routers (Femtocell/Picocell/Distributed Antenna System) improves the quality of enterprise communications

• Closed User Group (CUG)

• Enterprise mobility solutions: workers are travelling within and between office buildings and branches carrying their Smart Phones

• Fixed Mobile Converged Services• Mobile UC&C

Dedicated Cellular RoutersDedicated Cellular Routers Smart Phones & Dedicated Cellular Routers

Smart Phones & Dedicated Cellular RoutersSmart PhonesSmart Phones

Short Term Medium Term Long Term

Revenue

Drivers

Source: Frost & Sullivan analysis

Devices

Enterprise VAS and Opportunities Smart Phones are Central Devices of Mobile Unified Systems Improving Enterprise Mobility

Conclusions6

Conclusions

Source: Frost & Sullivan analysis

ConclusionsBroad interoperability

drives large-scale service uptake

Next-generation networks reduce bandwidth costs

Budget constraints of SMEs are key criteria

for basing value propositions

End-users are appreciating the soft

returns of unified communications

Software-centric business models are

the core of IT architecture

Managed and hosted services delivery models are cost

effective

A value-added unified communications solution should be simple to implement, easy for customers to exploit and interoperable across networks and devices

A value-added unified communications solution should be simple to implement, easy for customers to exploit and interoperable across networks and devices

For Additional Information

Christie CronjeMarketing & Corporate Communications Manager(+27) 21 680 3566christie.cronje@frost.com

Kate HowarthSales Director (+27) 27 680 3212Kate.howarth@frost.com

Birgitta CederstromBusiness Unit LeaderInformation & Communications Technologies(+27) 21 680 3263birgitta.cederstrom@frost.com

Merwin GrootboomAccount Manager(+27) 21 680 3294merwin.grootboom@frost.com