From VoIP to CPaaS – Shifts in the Cloud Communications Market and Future Outlooks
The cloud communications sector has flourished over the past decade, with virtual audio and video calls forming the basis of individual remote business relationships and entire distributed workforces. Since March 2020, the pandemic has been supercharging this development – VoIP revenues shot up 10.8% in 2020 alone.
In addition to tech behemoths, small to midsize businesses are also increasingly relying on cloud communications. This is particularly true in emerging economies, where most interactions are mobile-first. Additionally, 5G is expected to provide 1.2 billion connections by 2025, and cover a third of the world.
Furthermore, many businesses operate on a bring-your-own device (BYOD) basis. Since most cloud communications providers offer easy-to-handle apps for their end users, they benefit from this development.
In addition, their technological setup also makes it easy to integrate cloud communications into the Internet of Things (IoT), a crucial advantage in an economy moving towards a more connected world.
However, the cloud communications sector is hard to define exactly. There are several interrelated concepts, technologies, and products – each with different projected opportunities, challenges, and growth characteristics.
Investors interested in the sector encounter a profusion of acronyms to describe these technologies, from VoIP and UCaaS to CCaaS and CPaaS. This analysis clarifies these distinctions, and summarizes their currently projected market outlook.
A Profusion of Acronyms and Specialized Offers
The founding technology of the entire cloud communications sector is VoIP – Voice over Internet Protocol. As its name suggests, this allows users to make calls via the web. However, VoIP providers usually also include video calling, and follow the subscription-based “as a service” (aaS) business model.
According to recent reports, the size of the entire VoIP market amounted to $30 Billion in 2020, with a CAGR of 15%. Its 2027 value projection of $95 billion is driven mostly by cost-benefit advantages over traditional landlines, emerging 5G technology, and increased demand for mobility and flexibility.
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As VoIP grew mature, providers added an increasing number of communication channels to their offer, such as virtual fax, messaging, conferencing, and chat. Many also provide integrations for third-party platforms such as customer relationship management (CRM) systems.
Out of this development grew UCaaS – Unified Communications as a Service. Its value proposition is a streamlining of processes through centralizing all business communication channels. Along with avoiding friction losses from siloed messaging, this centralization also delivers considerable cost savings.
Globally, the UCaaS market is projected to grow at a CAGR of 9.6% until 2027, to reach an overall market value of over $26.2 billion, with North America and Europe accounting for the largest geographical markets.
While VoIP and UCaaS provide general-purpose communication tools to a large variety of businesses, CCaaS offers a more targeted technology. Contact Center as a Service (CCaaS) platforms are a type of UCaaS solution tailored to the needs of customer service or sales departments handling large volumes of customer communications.
In particular, many of these solutions integrate artificial intelligence (AI) tools such as self-service features and interactive voice response (IVR) to help increase the efficiency of interactions as well as customer satisfaction.
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