Enterprise communications sector saw it all in 2011

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness..." Charles Dickens' initial sentence in his classic A Tale of Two Cities could as easily have been written about the enterprise communications industry, which saw a little of all of that in 2011. And, it reflects in FierceEnterpriseCommunication's top stories for the year.

It was, for example, the best of times for companies in the videoconferencing businesses. Or, perhaps, it was for their customers who saw the technology begin to come of age in 2011.

Research from International Data Corporation indicates enterprises are investing in videoconferencing at a rate that exceeds the growth of other applications leveraging IP communications. The market saw a 20.3 percent spike in the third quarter to $680.4 million in revenue, and research said the market was likely to see a compound annual growth rate of 19 percent through 2015.

The big-ticket teleconferencing equipment market set a second-quarter revenue record, and Cisco (Nasdaq: CSCO) continued to own the market for telepresence in the C-level suite with more than a 50 percent share; Polycom (Nasdaq: PLCM) was the runner up and RADVision (Nasdaq: RDVN), which once supplied Cisco's telepresence technology, continued to struggle for a foothold in the North American market.

But the year saw a swing toward less expensive video conferencing that could extend to the desktop and beyond in SME and SMB segment. Ovum said it expected the videoconferencing market to hit $3.8 billion in revenue by 2016.

Start-ups like Vidyo, Logitech, even Cisco and Polycom, rolled out more affordable plays, democratizing the space and making it a more sought-after tool for businesses.

It was the best of times, too, for the mobile aspect of videoconferencing as devices like Apple (Nasdaq: AAPL)'s iPad and iPhone, and a number of smartphones operating on Google (Nasdaq: GOOG)'s Android OS got apps that brought them into the loop, making a mobile worker a truly connected mobile worker.

A new study said more than a quarter of enterprises will replace desk phones with mobile phones in the next two years, and that they are increasingly supporting a move to a diverse mobile workforce. The BroadSoft (Nasdaq: BSFT) survey said 72 percent of IT decision makers in the U.S. are looking to deploy videoconferencing across their organization in the next year.

Of course, there was a worst of times, as a pair of stalwarts in the space, Cisco and Hewlett-Packard (NYSE: HPQ) struggled mightily.

HP, which has seen its stock fall by nearly half over the past year (it closed at $25.44 Wednesday), may be in line for some foolishness, as well. It spent the last few months of CEO Leo Apotheker's brief tenure running hither and yon trying to craft a strategy--including divesting its PC business and dumping the webOS group.  Apotheker quickly became the ex-CEO, as HP named ex-eBay chief Meg Whitman its eighth top executive since 1999.

She kept the PC group and pushed webOS to open source (either brilliant or risky moves, time will tell). The turmoil at the top had a cost, as S&P downgraded its credit rating.

HP did have a couple of highlights; it picked up software company Autonomy for $11.7 billion and aggressively rolled out new UC solutions.

Cisco had just as rocky a year, seeing its stock drop as low as $13.30 from a $22.34 high in the past 52 weeks. It's back up to $17.92, with Wall Street saying it should top $20. Why? Two words: Fo-cus (or, John Chambers). The long-time CEO took a hard look at the company and decided it needed to go back to the basics.

Chambers went on a $1 billion cost-cutting drive, shedding underperforming divisions (and executives), cutting the workforce by 11,500, trimming overhead, streamlining processes and saw the company come back with one of its strongest quarters in years. Give Cisco the nod for applied wisdom.

VoIP, in all forms, made big news in 2011. In-Stat said social networks would play a huge role in the growth of mobile VoIP and, lo-and-behold, there it was. Facebook teamed with Skype on a VoIP product, and T-Mobile's introduced Bobsled. Not to be outdone, Google+ hit the scene offering mobile social connectivity as well.

Skype, of course made news of the biggest kind, dollar signs. The company that this year had been rumored to be planning a multi-billion IPO, instead was bought by Microsoft for $8.5 billion.

And, despite a lot of gnashing of teeth and hand wringing, especially after Skype yanked support for Asterisk, it appears that Microsoft hasn't decided to gut the platform-- it's actually building upon it--although it used Tango's video chat on the Windows Phone with Mango rather than Skype. Look for more integration of Skype in Microsoft products next year.

Unified communications, meanwhile, already growing in the enterprise, saw implementations in the U.S. double. A report said 76 percent of organizations that have fully implemented UC and track return on investment saw ROI meet or exceeded their expectations.

Those kind of results pushed expectations that unified communications spending growth would outpace IT budgets overall as organizations looked to make their voice and data applications more diversified, adding more video, collaboration and social communications tools.

Microsoft wasn't the only company acquiring depth for its bench. Here's a quick (but not all-inclusive) list of some of the top acquisitions in the space:

• Google (Nasdaq: GOOG) signed to buy Motorola Mobility (NYSE: MMI) for $12.5 billion. The search giant said acquisition of MM, already a dedicated Android partner, would help Google compete in the mobile computing market. CEO Larry Page said he'd spoken to the top five Android licensees and "they all showed enthusiastic support for the deal." Android will remain an open platform.
• VBrick Systems acquired online video platform Fliqz Media, in a push to expand into small and medium enterprises in addition to the education, government and large enterprise markets VBrick already serves.
• With an eye on squaring off with Cisco and future market share growth, Polycom paid $89 million for Hewlett-Packard's visual collaboration business, including the Halo products and managed services business. Financial terms weren't disclosed.
• Polycom also acquired low-cost videoconferencing and video collaboration company ViVu. Terms of the cash deal, were not released. ViVu gives Polycom a fast-track to embed HD video into web-based applications through an OEM model.
• Polycom paid $50 million for enterprise-class online video platform Accordent Technologies, saying the deal would allow it to integrate its open standards, UC Intelligent Core and UC endpoints with Accordent's open standards video content management solution.
• Level 3 Communications entered an agreement to purchase Global Crossing. The combined company will operate a global services platform based on fiber optic networks on three continents, connected by extensive undersea facilities. The all-stock transaction was valued at $23.04 per share, or approximately $3 billion, including the assumption of approximately $1.1 billion of net debt from Global Crossing.
• M5 Networks acquired Callfinity, which provides contact center software to SMBs, and is on the Inc. 5000 list as one of the fastest-growing U.S. companies. The deal gives M5 the ability to offer mid-size business clients access to advanced IP contact center technologies, expanding its reach to businesses with high-end call center requirements. No details on the deal were released.

In other news, during 2011, Infonetics said 2010 was a breakout year for SIP trunking, adding that the VoIP services market would hit $74.5 billion in 2015.

The research company also said SBC revenues were up 70 percent on the strength of SIP trunking services because of continued adoption of SIP trunking services by enterprises.

Finally, the cloud rolled in in a big way. But that's, ahem, still up in the air. We'll take a deeper look at the impact it had in 2011 and the impact it's going to have in 2012, early next year.

That's a wrap. Let me know what you think should have been included. I'll do a follow up with your ideas next time.--Jim

P.S. We'll be taking a holiday break from publishing until Jan. 3. But, I'll be keeping the website updated with any breaking news. Have a safe and happy holiday, and thanks for reading. See you next year!