Cloud Disruption Forces Unified Communications Vendors To Hunt For Deals

(Note: This story was originally posted on CRN.com Aug. 9.)

If you're a solution provider looking to score more cloud-based unified communications deals, your ship may be coming in. 

The UC landscape is being shaken up as vendors scramble to become cloud-oriented so they can meet the market’s demand for cloud-based UC solutions.

“The UC world as we know it is changing faster than some are even aware of,” said Joe Rittenhouse, president of business development and managing partner at Crystal Lake, Ill.-based solution provider Converged Technology Professionals, which partners with Microsoft and ShoreTel. “Anyone who has paid attention to the trends in the UC industry knows that there is a major interest for a lot of companies to pursue consolidation – Polycom, Avaya, Mitel, ShoreTel, etc.”

[Related: CRN Exclusive: Polycom Exec On Mitel, The Benefits Of Going Private, And Making The Right Investments For Partners]

Industry veterans like Avaya and ShoreTel are hiring financial advisors to explore new strategic options, which could include the potential sales of the companies or selling off specific assets. Polycom is set to be bought by Siris Capital Group, while ShoreTel recently acquired cloud-based UC specialist Corvisa.

Mitel – which made a failed bid for Polycom – acquired cloud-based UC provider Mavenir last year and is actively pursuing more acquisitions, Mitel executives said during the company's recent earnings call.

Research firm Gartner expects more UC consolidation and increased user expectations, prompting an emphasis on vendors’ financial viability.

“The integration of on-premises UC with cloud and hybrid UC services continues to play an increasingly important role,” said Gartner UC Analyst Bern Elliot. “As the enterprise UC market continues to mature, we’re expecting more consolidation.”

Although market leaders Cisco and Microsoft have deep enough pockets to fend for themselves, others are taking more drastic measures as customer demand for cloud-based solutions grows.

The global UCaaS market is expected to grow from $15.1 billion in 2015 to $24.8 billion by 2020, representing a combined annual growth rate of about 11 percent, according to market research firm MarketsandMarkets. In North America, UCaaS generated nearly $4 billion in revenue last year, and research firm IHS expects the market to grow 11 percent annually through 2020.

In May, sources said Avaya's owners -- private equity firms Silver Lake Partners and TPG Capital -- were considering the sale of the company or selling off specific assets. Genesys Telecommunications, a call center software provider, is now in talks to acquire Avaya’s contact center business for around $4 billion, according to a Reuters report.