Studies predict surge in UM usage

The research firms International Data Corp. (IDC) and Ovum Ltd. have released data on the adoption of unified messaging (UM), both indicating that UM systems, which provide employees with one “mailbox” for all business-related communications, will become much more broadly adopted in the near future.

UM systems are appealing to companies because they promise to increase worker productivity by making it easier for them to manage, review and respond to voice, e-mail, short messages and fax communications using whatever device the employees choose – a PC, telephone, mobile phone or handheld computer.

According to the IDC study, the number of unified messaging (UM) mailboxes bought by companies worldwide will increase from an estimated 1 million in 1999 to more than 38 million in 2004. The Ovum Ltd. study measures free UM services for U.S.-based users, saying the number of free subscriptions is already 24 million. This is expected to grow to 34 million by 2002, but the proportion of free subscriptions in the overall market is expected to decline, Ovum says.

The IDC report, “Turning the Corner: Unified Messaging Applications Market Forecast and Analysis, 2000-2004,” examines the market for UM applications sold for business usage. It says the recent success of hosted UM applications, the growth of IP-based PBXs (private branch exchanges) and improvements to reliability and scalability have fueled worldwide UM spending and mailbox growth. Vendor revenue in this market is expected to jump from US$132 million in 1999 to US$1.7 billion in 2004.

Several trends, including an increasingly mobile workforce and standards-based applications, will continue to drive the UM marketplace, Robert Mahowald, senior analyst for IDC’s collaborative computing program, said Tuesday. More companies are going to use service providers rather than develop their systems in-house. That trend is driving companies that have developed their own UM systems to outsource their software, Mahowald said.

Improved UM products also have enticed a growing number of service providers into the game. Although demand for enterprise UM applications will outpace hosted UM applications in the near term, IDC predicts hosted applications will be the leading worldwide segment in 2004, with 22 million mailboxes and nearly $1 billion in revenue.

The Ovum report, “Next-Generation Messaging: Unified Communications and ASP Strategies,” issued last month and authored by John Delaney, senior analyst at Ovum in London, found that it will become more and more difficult for all but the largest portals offering free UM services to run a viable UM business. In addition, as UM services become an indispensable working tool, the free services are likely to fall short of workers’ needs and expectations, the Ovum report says.

Consequently, subscriptions to free services are expected to decline steadily as a proportion of total subscriptions, Delaney said. Ovum notes that service providers currently can tap into two fast-growing sources of UM revenue – service subscription fees and fees from the increased usage of other network services such as voice mail access.

But Delaney cautions that although reasons for offering such services are compelling, the current market is very complex and very confusing with a lot of different factors affecting it.

Nevertheless, Ovum forecasts worldwide UM service revenue to reach US$31 billion by 2007. Of the total revenue forecast, almost US$13 billion will come directly from service subscription fees, US$16.5 billion from increased usage of other revenue generating network services and US$1.6 billion will be attributed to advertisers. Ovum also says there will be about 218 million active users, including about one-quarter subscribing to free services, by 2007, up from a total free and fee-based subscribers of 5.5 million in 2001.

IDC, in Framingham, Mass., can be reached at; Ovum is on the Web at