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Web Conferencing Hopes to Build on 2001

  |  April 5, 2002   |  Comments

The worldwide Web conferencing market generated $266 million in revenue in 2001, according to Frost & Sullivan, and could reach as much as $2 billion by 2008.

The worldwide Web conferencing market generated $266 million in revenue in 2001, according to Frost & Sullivan, and could reach as much as $2 billion by 2008.

"As the Web conferencing market entered 2001, providers were facing numerous growth opportunities," said David Alexander, Frost & Sullivan industry analyst. "Since the market was already backed by healthy demand and revenue growth rates, 2001 was to be the 'year of years' for Web conferencing vendors. These predictions became a reality as business practices worldwide were altered immediately after Sept. 11."

Throughout 2001, the weak economy forced many organizations to impose budgetary cutbacks, with travel budgets atop many lists. While this encouraged demand rates within the Web conferencing market, additional travel restrictions and budgetary restraints following the Sept. 11 attack further propelled growth.

"Since airline travel was completely halted for several days after Sept. 11, businesses searched for ways in which to conduct 'business as usual.' In many of these situations, enterprises turned to Web conferencing to fulfill their presentation and data collaboration needs," Alexander said.

According to Frost & Sullivan, Web conferencing vendors noted experienced heightened interest levels of more than 50 percent and increased sales of more than 25 percent in the days immediately following the terrorist attacks. Although these growth rates have slowed in recent months, they remain higher than pre-Sept. 11 values.

"While the market is no longer significantly feeling the direct effects of Sept. 11, the increased awareness has resulted in continued growth of Web conferencing use," Alexander said. "Moreover, a multitude of other factors related to the event are still influencing this growth."

The increased media exposure that the industry received following the attacks also drove numerous organizations to consider adopting Web conferencing solutions. In addition, many existing clients increased their usage rates as they further realized the significant savings and efficiency benefits of using this technology for business communications.

The Conferencing Service Provider report from Wainhouse Research found that the overall conferencing services market will grow by 22 percent over the five-year forecast period to $9.8 billion in 2006, led by Web conferencing services, which are forecast to have a 42 percent compound annual growth rate over five years.

Audio conferencing, which makes up the lion's share of the total conferencing market, is forecast to grow at more than 18 percent, while the unattended audio conferencing segment is forecast to grow at more than 33 percent. All conferencing segments, including video and Web, are expected to migrate to unattended, on-demand services that present both lower costs for the end users as well as higher margins for the service providers, Wainhouse found.

"The conferencing service provider industry has seen a sharp up-tick in business since 9-11," said Wainhouse Research's Managing Partner, Andrew Davis. "And after a healthy first nine months will end the year up 28 percent from 2000. While we don't expect this sharp increase to last, we do expect a long-term positive effect on the usage of conferencing service providers and hence their revenues, despite the continuous downward pressure on prices."

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