Video conferencing revenue experienced a strong seasonal decline in the first quarter of 2014, but it remains positive on a year-over-year basis.
That's according to Infonetics Research's first quarter 2014 (1Q14) Enterprise Telepresence and Video Conferencing Equipment report, which tracks dedicated and PBX-based video conferencing and telepresence infrastructure and endpoints.
"The dedicated systems market continues to struggle as companies look for more cost-effective video solutions," says Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research. "This dynamic is driving the PBX-based video market, which is delivering all market growth."
For 4Q13, the analyst firm noted that demand for video capabilities was at an all-time high, though businesses' willingness to spend was not, causing a shift from high-end telepresence suites and multipurpose room systems to lower-cost software and videophones for personal video conferencing.
IDC's Worldwide Enterprise Videoconferencing and Telepresence Equipment QView report last month also showed declining results for 1Q14, with overall video conferencing equipment revenue decreasing 20.0% quarter-over-quarter and 15.9% lower year-over-year.
IDC says total worldwide enterprise video equipment market revenue in 1Q14 reached $473.5 million. The total number of video units sold in 1Q14 was also down 13.3% quarter-over-quarter and 6.2% year-over-year.
"We continue to see the impact of delayed customer buying decisions, lower-cost systems, more software-centric products, and competitive cloud-based video service offerings on the worldwide enterprise video equipment market," says Rich Costello, senior analyst, enterprise communications infrastructure at IDC.
"The weak vendor results are also indicative of the ongoing transition from a primarily hardware-based reporting model to one impacted by the interest in and growth of video subscription services. On the bright side, most or all of these vendors are now offering cloud-based video alternatives to customers too - in addition to their own lower cost, premises-based systems."
According to Infonetics Research, the worldwide enterprise video conferencing and telepresence market was dealt a strong seasonal blow in 1Q14 and is down 22% sequentially.
It adds that demand for video conferencing capabilities remains strong, but buyers' preferences for less costly personal systems is slowing revenue growth.
However, it reveals that sales of PBX-based systems are up 32% in 1Q14 from the previous year (1Q13), adding that videophones were once again the fastest-growing segment of the hardware endpoint market, with unit shipments increasing 48% in 1Q14 from the same period a year earlier.
The firm also points out that growth in Asia Pacific has been slowing, but it is still poised to become the strongest performing region in 2014.
Infonetics, nonetheless, projects global enterprise telepresence and video conferencing revenue to grow in the single digits at least until 2017.
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