european smb market

European SMB Market Becomes the Next Battleground for the Unified

Communications Vendors

Dorota Oviedo, Industry AnalystUnified Communications and Collaboration

July 1, 2010

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Focus Points

Importance of the SMBs to the European Economy

Major SMB Concerns as Opportunities for UC Vendors

UC Channel Expectations for 2010

Key Success Factors in Serving the SMB Sector

Summary of SMB Market Trends

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Italy

France

Turkey

Spain

Czech Republic

Germany

The United Kingdom

Hungary

Poland

Sweden

Portugal

The Netherlands

Belgium

Norway

Denmark

Switzerland

Austria

Finland

Ireland

Russia

Iceland

Luxembourg

Country

Number of

Businesses

(Thousand)

Number Medium Businesses

Number of Small Businesses

Importance of the SMBs to the European Economy

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

Unified Communications in the SMB Sector: Number of SMBs (Europe), 2009

� SMBs as the backbone of the European economy - potential source for jobs and economic growth

� Businesses employing less than 250 persons account for 99.8 percent of all enterprises active within the EU

� According to Eurostat:

� 67 percent of workforce in the EU is employed in one of almost 20 million active small businesses

� 58 percent of the economy’s value-added is generated by this sector

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Major SMBs’ Concerns

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan, based on data from European Commission's Eurobarometer

Unified Communications in the SMB Sector: Major SMBs Concerns (Europe), 2009

0 5 10 15 20 25 30 35 40 45 50

Problems with the purchasing power of customers

Problems with administrative regulations

Lack of skilled labour

Labour force too expensive

Problems with infrastructure

Limited access to finance

Implementing new technology

Implementing new forms of organisation

Lack of quality management

Constraints and Difficulties

Number of SMBs (%)

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Problems with the purchasing power of customers

Problems with administrative regulations

Lack of skilled labour

Labour force too expensive

Problems with infrastructure

Limited access to finance

Implementing new technology

Implementing new forms of organisation

Lack of quality management

Major SMBs’ Concerns as UC Opportunities

Source: Frost & Sullivan

Unified Communications in the SMB Sector: SMBs Concerns Impacting UC Vendors (Europe), 2009

Factors Impacting

UC Vendors

� Implementing UC solutions enables SMBs to optimise the use of currently available human resources

� Convergence of networks and devices leads to substantial cost savings

� SMBs require simple to use and manage all-in-one communication solutions

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Channel Expectations for 2010 (1/2)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

VoIP / IP PBX

Fixed-Mobile Convergence

Unified Messaging

Telephony Presence

Contact Center

Instant Messaging

Audio Conferencing

Web Conferencing

Desktop-based Visual Collaboration

Room-based Visual Collaboration

SMB

LE

Question reads: Which communication tools present you with the best sales opportunities in 2010? Please select all that apply.

Note: Multiple mention question. Base - Channel Partners Serving SMB Sector Only (N=78) and Large Enterprise Sector Only (N=23).

Unified Communications in the SMB Sector:Comparison of Best Sales Opportunities in the SMB and Large Enterprise Sector (Europe), 2010

Source: Frost & Sullivan 2010 Unified Communications Channel Survey

Unified Communications Channel Partners’ Perspectives on the Developing Market in Europe

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12.8%

3.8%

5.1%

43.6%

34.6%

Demand Will SignificantlyIncrease

Demand Will SomewhatIncrease

Demand Will RemainUnchanged

Demand Will SomewhatDecrease

Demand Will SignificantlyDecrease

Channel Expectations for 2010 (2/2)

Source: Frost & Sullivan 2010 Unified Communications Channel Survey Unified Communications Channel Partners’ Perspectives on the Developing Market in Europe

Question reads: Thinking about 2010, how would you summarise your expectations with regards to the demand for UC products and services in Europe?

Unified Communications in the SMB Sector: Demand Expectations in the SMB Sector (Europe), 2010

43.5%

26.1%30.4%

Large Enterprise Channel Partners (N=23) SMB Channel Partners (N=78)

� Overall UC channel is very optimistic - predicting demand increase in 2010

� The outlook in the SMB sector, although still positive, depicts more cautiousness.

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Key Success Factors in Serving SMB Sector

PESTLE Analysis: Introduction

Ease of Use and

Management

Key SuccessFactors

FMC / MobilityApplications

Cost Effectiveness /

Low TCO / OPEX-based

Pricing Investment Protection

Simple to Sell and

Deploy

Source: Frost & Sullivan

Unified Communications in the SMB Sector: Key Success Factors (Europe), 2009

Local “Trusted

Advisors”as Channel

Partners

Strategic Focus

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Summary of the UC for the SMB Market Trends

UC vendors strategic focus on SMBs

IP telephony and mobility as major growth drivers

Offering OPEX-based pricing

Network-based services with per user / per month payments

Leasing schemes for CPE

Increase in popularity of hosted and managed services

Vendors partnerships to launch UCC-in-the-box

Channel building

Simplification

Local “trusted advisors”

Growing importance of carriers

New market entrants

Market to grow significantly

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Next Steps

� Request a strategic approach document for a Growth Partnership Service or Growth Consulting Service to support you and your team to accelerate the growth of your company.

(myfrost@frost.com) +44 (0)20 7343 8383

� Join us at our annual Growth, Innovation and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com)

� Register for the next Chairman’s Series on Growth:

The CEO’s Perspective on Innovation: How Creativity Fosters Growth

14 July 2010 10:00 AM BST (www.frost.com/growthEU)

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities (www.frost.com/news)

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For Additional Information

Joanna LewandowskaCorporate CommunicationsICT Europe+48 22 390 41 46joanna.lewandowska@frost.com

Daniel ShepherdDirector ICT Europe, Israel & Africa +48 (0) 22 244 08 64daniel.shepherd@frost.com

Dominic Dodd

Principal Analyst

Unified Communications & Collaborations

+44 796 854 1357

dominic.dodd@frost.com