Videoconferencing industry to be worth £2.3bn by 2016

The videoconferencing industry will be worth $3.8bn (£2.3bn) by 2016 as large enterprises and SMEs warm to the cost savings and efficiencies the technology provides, according to Ovum.

The analyst firm's Enterprise Business Video Forecast: 2011-16 said that the market will see compound growth of 5.79 per cent every year to 2016, making it one of the fastest growing ICT markets in the world.

The use of large-scale telepresence deployments will be at the forefront of this growth, increasing nearly 20 per cent in the next five years to make it a $1.1bn (£0.66bn) global market by 2016. The market in the UK it will be worth £138m, up from £110m.

Report author and senior Ovum analyst Richard Thurston told V3.co.uk that businesses are starting to buy videoconferencing systems for a combination of reasons.

"There are numerous advantages to telepresence, such as reducing travel costs, improving productivity and reducing carbon footprints, and the technology is now of a very high quality, so take up is increasing," he said.

"Furthermore, events such as the volcanic ash cloud caused a huge spike in the use of videoconferencing, and helped businesses reassess the use of the technology."

Small businesses using dedicated videoconferencing units are also on the increase, Thurston explained, and vendors including HP and Cisco are capitalising on the demand so that companies of all sizes can use videoconferencing.

However, Thurston warned that vendors need to address interoperability issues to ensure that systems work together, predicting that the market will be worth only $780m (£472m) by 2016 if businesses remain wary of these problems.

"Interoperability is still a big stumbling block and, although firms like to claim that they have removed the issue, businesses need to be aware that they could face potential problems. So it's paramount that vendors work together to solve this issue," he said.

Thurston added that public deployments of videoconferencing systems are also on the increase, allowing firms to visit locations such as hotels and pay around $1,000 (£606) an hour to use a telepresence system, far below the cost of travelling.

Governments are starting to embrace the technology to make long-term savings, the Spanish government recently announcing a large-scale deal with Cisco.

The figures will make pleasing reading for executives at firms such as Cisco, Avaya and Polycom, all of which are striving to provide videoconferencing tools for large enterprises and SMEs as they seek to capitalise on this growth.