2010 Year in Review: Hosted Unified Communications on the rise

A recent Forbes blog post quipped "Why hosted VoIP? Why would I do anything else?" Some companies in this industry like to agree with that statement--probably because they are making some serious money over that sentiment.

For a while, hosted VoIP looked like a play for the small- and medium-sized business world, but tough economic times combined with the increased reliability and speed of cloud-based services has even enterprise users looking critically at hosted as an option. A recent ABI report sees Hosted IP PBX services growing 15.3 percent by the end of 2010. The hosted market should account for $3.4 billion in revenue in 2010. ABI believes that the slow economy and the price war between hosted and on-premise solutions made hosted offerings more attractive to business customers.

In the age of on-demand TV and iTunes instant downloads, even companies want things fast and hosted UC means fast deployments, instant upgrades, adding seats with just a click on a website. On Premise VoIP means that a company needs to buy all its VoIP equipment upfront and parting with chunks of cash like that is something most companies just don't want to do in uncertain economic times. With a hosted solution, the major equipment is off site--and literally out-of-sight out-of-mind. The company can focus on using its UC system rather than worry about maintenance and management of VoIP technology.

Hosted VoIP company 8x8 provided a shining example of the move from being just an SMB play to being a large business play with a recent announcement. 8x8's newest customers includes a the independent publishing house H.W. Wilson which installed 160 8x8 Virtual Office hosted PBXs at its headquarters in New York. The company offers print and online indexes, full-text databases, and other products and services tailored for public, school, college, and special libraries in the U.S. and worldwide.

8x8 also signed up an IT company working in 15 states as well as China and India and a college up in Massachusetts. Around earnings time, 8x8 Chairman and CEO Bryan Martin remarked that they "continue to experience healthy demand for our hosted communications services from both the under-10 employee small business customer as well as larger SMBs and distributed enterprise organizations and anticipate these adoption trends will continue to drive the top line revenue upwards in the coming quarters." Small business is still the name of the game, but the trend is seeing big business look to hosted as well.

According to the report from ABI Research, unified communications (UC) is expected to be a $4.8 billion market opportunity by 2015. We will have to wait a few years for that "Year in Review" to see if that prediction is right.