AT&T Unified Communications News

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1 AT&T Unified Communications News UC trends in the enterprise: A 2014 review Challenge: Knowing how, when and where to deploy UC in the enterprise for the best advantage Solution: Keep abreast of UC trends, consider integrated suites and look to the cloud as a UC enabler AT&T difference: The expertise to help you plan a strategy and roadmap for UC in the cloud Research from Gartner: Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery Featuring research from

2 AT&T Unified Communications News page 2 According to Gartner s end-user survey results, by 2017 about 48% of IT planners expect the cloud to be their primary deployment model for UC functionality 1. 1 Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery, July 2014, Gartner, Inc. Introduction Unified communications (UC) solutions from audio, web and video conferencing to telephony, unified messaging, IM and presence can be valuable productivity tools in the enterprise. As you consider adopting or expanding UC tools, you may have questions, such as: How are other enterprises using UC technology? How are they expanding capabilities to deliver more functionality to more users? How are they managing the technology lifecycle amidst constant change? This edition of Unified Communications News is devoted to helping you find answers to many of these questions. It features a Gartner Research report, Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery 1, which provides a glimpse into what s happening in the broader UC market and the more prevalent role cloud and integrated suites are playing in industry-wide UC deployments. In general, some of the most common reasons customers may choose cloud-based UC could include: The drive to reduce capital expenditures. Deploying UC in the cloud may be able to help you avoid costly investments in new equipment. Flexible pricing models include predictable per-month or per-user fees. The need to decrease deployment times. With elongated purchasing and implementation cycles, on-premises deployments could take months, delaying the benefits they can bring to your business. Cloud deployments can often be deployed in a shorter timeframe. Requirements for a high-performance infrastructure. Computehungry demands from UC tools, such as videoconferencing, may tax your internal systems. The on-demand scalability of the cloud can deliver the high-quality experience your employees and customers expect, and on a global basis. Potential reductions in staff demands. Rather than devoting the time of your internal IT staff to managing an infrastructure 24x7x365, a cloud provider can do some of the work for you. For example, they can apply patches and updates or provide user support. The need for UC skills. Much more than just IM, today s UC includes advanced communication and collaboration functionality, and your internal staff may not have the expertise needed to keep up. Look for a provider who can combine a cloud infrastructure with consulting services that let you tap into UC expertise to help simplify and optimize your implementation. The shift to UC in the cloud If you re weighing the features of premises-based UC against the potential advantages of cloud, you may benefit from knowing the outcome of recent Gartner research: Increasingly, cloud-based provisioning is becoming more prevalent in organizations as IT decision makers attempt to meet their specific business needs, and use the flexibility offered by new delivery models 1.

3 AT&T Unified Communications News page 3 Flexibility requirements. Hybrid cloud architectures may allow you to mix both cloud and on-premises infrastructures to deliver your UC applications. This can help you meet the specific business needs of certain applications, while helping to protect existing IT investments. For example, if you already have designated telepresence rooms, you may want to continue to leverage that on-premises investment, but you can also take advantage of a cloud-based, multi-point solution for mobile videoconferencing, such as AT&T Video Meetings with Blue Jeans. This cloud-based video conferencing service offers multi-vendor and multidevice support for a monthly subscription. Microsoft Lync and Cisco Jabber are currently supported 2. Federation needs. Extend collaboration beyond your internal organization to include partners, suppliers and vendors. Rather than building custom company-to-company connections, you may be seeking easier and more efficient ways to collaborate outside your organization with partners, suppliers or vendors. With AT&T UC Federation, a onetime connection can be configured from your supported UC solutions to the cloud service. Interoperability across supported UC platforms helps you collaborate with other companies within your federated ecosystem. Expansion through integrated UC suites Whether you started your UC rollout with one application or a certain subset of users, if you want to know about other ways that may potentially help you get more from your investment, you may want to consider: Leveraging the suite. Integrated suites can make it easier to expand UC functionality virtually anywhere and to nearly any device. For example, AT&T Unified Communications Services (AT&T UC Services) integrates multiple UC and telephony tools with presence behind a single user interface, providing easy, centralized access to high-quality voice and UC features from the AT&T cloud. It provides a standardized way to extend a consistent set of features to workers in the office or mobile environment, and it can be accessed in the cloud via a range of wired and wireless devices. Interoperability. According to the Gartner study: IT planners are significantly influenced by the existing communications environment, and frequently base future investment decisions on integration with existing point solutions. 1 In addition to integrated suites helping to free you from the need to build custom interfaces between tools, they can also help you protect previous investments in other tools. For example, AT&T Unified Communications Voice (AT&T UC Voice) is a cloud-based IP telephony solution that tightly integrates voice with UC platforms, such as Cisco Jabber, Microsoft Lync, Google and IBM Sametime, while supporting integration with legacy telephony solutions, such as TDM/IP PBX systems. Bundled offers. Bundles that bring the benefits of two or more solutions into one offering can simplify how you deploy and expand UC functionality to more users. For instance, AT&T UC Voice with Cisco Jabber is delivered through the AT&T cloud. The integration work between solutions has already been done for you, which helps decrease ramp up time. A single Cisco Jabber interface can help give users access to many UC and voice applications. Since it comes to you as a fully tested solution, you can roll it out to more users with more confidence. Looking ahead, we expect IT planners to increasingly expand the range of UC functionality they use in integrated suites and bundles to enable communications across organizations and to increasingly access functions across mobile devices. Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery, July 2014, Gartner, Inc. 2 Supported products are subject to change.

4 AT&T Unified Communications News page 4 Managing the UC life cycle Given the capital outlay for some on-premises UC solutions, the replacement cycle may be longer than it should be. The question is, what s happening during that time span? Are the applications being kept up to date? Is the complexity of rolling out new functionality keeping companies stuck in the past with technology that no longer meets their needs? Are older applications falling out of support? Is the technology infrastructure keeping up with the highperformance, real-time interaction demands of UC applications, such as videoconferencing? These can all be reasons for closing the time gap between initial installation and replacement, and for transitioning to cloud-based UC services. Automatic updates. Depending on the cloud service you choose, the provider can push software updates out to users automatically, as they become available. For the UC applications they host for you, you can worry less about obsolete, unsupported software or the steep maintenance fees that can result. AT&T: Helping you evolve UC to the cloud AT&T can support your transition to cloud-based services from defining a vision and requirements, evaluating solutions and creating a roadmap, to developing a business case, helping you prepare an ROI analysis and planning for continuous improvement. Find out more about cloud-based UC solutions from AT&T, including AT&T UC Voice, AT&T UC Services, AT&T UC Voice with Cisco Jabber, AT&T UC Federation and AT&T Video Meetings with Blue Jeans. Source: AT&T Midsized enterprises average six years, and large enterprises invest in new solutions every five to 12 years. Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery, July 2014, Gartner, Inc. Global consistency. With your UC applications hosted in one place the cloud you can update global users all at once, helping reduce the software incompatibility issues that can happen when different groups of users are running different versions of software. Technology refresh. You may currently have the latest and greatest software, but an aging computing infrastructure can cause performance problems, frustrate users and get in the way of productivity. It can also become very expensive to maintain. With cloud computing, you can opt to have the vendor take responsibility for maintaining, updating and refreshing the technology infrastructure, and the cost can be rolled into your monthly service fee.

5 AT&T Unified Communications News page 5 From the Gartner Files: Market Trends: Key Trends in Unified Communications Technology, Adoption and Delivery Organizations UC adoption and use correlates to their size and internal factors, such as skills, budgets and structure. To formulate effective UC product and solution road maps and go-to-market strategies, providers product planners should understand organizations behavioral and adoption trends. Key Findings Factors like internal IT skills, regulations, structure, cost, region and the maturity of providers offers will determine the buying model that organizations choose. According to Gartner s end-user survey results, by 2017 about 48% of IT planners expect the cloud to be their primary deployment model for UC functionality. UC adoption and growth projections can be approached by evaluating organizations buying behavior. UC growth trajectories will be shaped by behavior related to functional expansion, user expansion and replacement cycles (five to 10 years for on-premises, and three years for cloud based). UC functions (videoconferencing, Web conferencing, IM/presence, telephony and unified messaging) each have distinct market influences that shape enterprises adoption and provisioning model preferences. Increasingly, these functions will be offered as part of integrated suites or bundles, instead of stand-alone offers. Recommendations Hone your UC market-specific, go-to-market strategies. UC adoption varies markedly across organizations of varying size and in various geographies. Ensure that your solutions marketing messaging and delivery strategies address the buying behaviors of unique market segments. Evaluate organizations current adoption of UC functions, as well as changes associated with use and replacement cycles, to gauge and plan for shifts in UC delivery. Companies purchasing preferences are shifting, and many providers haven t evolved their go-to-market strategies to keep pace. Continue to enhance and integrate user and management interfaces and mobile support across UC applications. This will encourage clients to acquire integrated UC functions rather than adopt siloed communications functionality. Introduction Formulating effective go-to-market strategies requires that technology provider planners must first have a solid understanding of unified communications (UC) adoption trends across a variety of different submarkets. They can approach UC adoption by evaluating a range of assumptions that relate to user and organizational behaviors. Understanding how organizations make their communication decisions, how they approach their upgrade cycles, how communications functionality is distributed across the organization and the ways in which functionality is provisioned (via the cloud or on-premises) gives providers key insight into future UC adoption trends. Broadly, organizations UC adoption and use trends can be correlated to organizations size and internal factors, such as the level of relevant skills they have, and budgetary and organizational structural considerations. Increasingly, cloud-based provisioning is becoming more prevalent in organizations as IT decision makers attempt to meet their specific business needs, and use the flexibility offered by new delivery models. To gain an edge in formulating effective product and solution road maps, and developing effective go-to-market strategies, planners should understand organizations behavioral trends. This document can serve as a useful companion piece to Gartner s forthcoming premisesbased and cloud UC forecasts. (See Note 1 for UC definitions.)

6 AT&T Unified Communications News page 6 Market Trends Expansion and Replacement Shape the Market The future market for UC will be shaped by several overarching adoption trends (see Figure 1): Functional expansion User expansion Replacement cycles Functional Expansion IT planners frequently start with one set of UC functionality, and then expand it over time. For example, organizations might start with telephony and unified messaging, combined with IM/presence and basic audioconferencing capabilities. Then, over time, the organization could add Web conferencing and videoconferencing capabilities. IT planners are significantly influenced by the existing communications environment, and frequently base future investment decisions on integration with existing point solutions. Looking ahead, we expect IT planners to increasingly expand the range of UC functionality they use in integrated UC suites and bundles to enable communications across organizations, and to increasingly access functions across their mobile devices. Significant variations occur across organizations of different size segments (very small business, small business, midsize enterprise and large enterprise). Most large enterprises currently use a range of UC functionality (for example, most have various forms of conferencing to meet varying basic and advanced conferencing capabilities, utilizing a mixture of cloud- and premises-based approaches). Some small businesses, by contrast, have more basic audioconferencing and Web conferencing capabilities, but haven t yet incorporated advanced conferencing into their business. will continue to be acquired in siloed functions, rather than in more comprehensive, integrated suites. This makes them easier candidates for replacement as other vendors expand the breadth and depth of their suites. Mobile integration also needs to be fully supported to achieve widespread appeal. User Expansion Often, IT planners initially extend UC applications and services to a specific subset of workers. An entire company might have telephony and voice/unified messaging capabilities, for example, but only a subset of workers might have access to IM/presence or videoconferencing capabilities. Typically, organizations take a role-based or geographicbased approach to distributing UC functions to employees across the organization. Looking ahead, we expect to see licensing approaches and bundling initiatives that favor the broader extension of UC applications across the organization. Essentially, IT planners, over time, will increase the ratio of users that have more-advanced UC applications and services. Figure 1 Overarching Trends in UC Markets Functional Expansion: IT planners add UC functions over time (Start with one function, and grow to another) User Expansion: IT planners extend UC functionality to additional users over time Replacement Cycles: Replacement cycles vary by UC function, organization size segment and provisioning model To evaluate growth opportunities, providers product planners need to understand the existing saturation and adoption patterns associated with conferencing and other communications elements. Furthermore, providers need to continue to enhance user and management interfaces to encourage their clients to acquire integrated UC functions. Solutions that fail to achieve a deeper level of integration Source: Gartner (July 2014) UC Buying Behavior

7 AT&T Unified Communications News page 7 Providers need to create licensing structures and bundles that encourage broad UC deployment and usage across the entire organization. From a user perspective, failure to extend usage limits the value of UC. So, in essence, if only a proportion of individuals use a particular collaboration tool, collaboration does not become as useful to those employees who do take advantage of the functionality. From a provider s perspective, limited use of UC prevents users and IT planners from seeing the full value associated with that provider. This means that competitive offers could gain favor more easily especially when competing proposals emerge that extend broad UC functionality easily across the organization. To ensure the activation and use of UC applications, providers interactions with end users must not stop directly after the sales cycle. Providers that work with IT planners to develop individualized customer road maps to help plan expansion among user groups, as well as expanded functionality across the organization, will promote longerterm usage and success for UC. As part of this ongoing effort, training and examples of usage best practices should be included as part of the follow-up. Replacement Cycles Replacement rates will determine how and when IT planners opt to invest in new UC solutions. Sales of premises-based solutions for telephony platforms tend to have replacement cycles ranging from five to 10 years. Small businesses have more-rapid replacement cycles, in the four- to sixyear range (with an average of five years). Midsize enterprises average six years, and large enterprises invest in new solutions every five to 12 years (with an average seven- or eight-year cycle). Economic conditions significantly influence replacement cycles for premises-based solutions. Soft economic conditions will produce an extension of use (whereby, IT planners stretch the life cycle); while periods of economic growth create more favorable investment conditions and loosen budget restrictions. This encourages spending on business systems and software applications. Cloud investment cycles typically average three-year terms. Term lengths vary to an extent, depending on the organization s size. Very small businesses typically have a one-year contract term, while small businesses have a mixture of one-year terms and three-year terms. Midsize to large organizations typically have a three-year contract term. The rate of turnover for cloud UC is fairly low, and most providers become unseated because of poor service quality. How Companies Buy Unified Communications Organizations adopt UC functionality using different provisioning models or purchasing styles: cloud, premises-based or a combination of the two that can be defined as hybrid (for more information about hybrid UC provisioning, see Note 2). A number of factors influence an organization s decision whether to purchase UC functionality via cloud, or as on-premises or hybrid models. The main factors are: Constraints and skills of internal IT resources Cost factors and budget considerations Existing infrastructure and the remaining useful life of UC elements Regulatory considerations Organization structure distributed or centralized and the geographic location of sites Communications and specific customization requirements Financial, business model and cultural factors Scalability requirements Maturity and availability of providers offers Regions that exhibit healthy business climates will have a higher ratio of new and greenfield businesses, and will also yield faster equipment replacement rates. Conversely, regions with ongoing economic uncertainty will have longer replacement cycles, as IT planners implement measures to keep existing equipment running. They will also have fewer new business opportunities.

8 AT&T Unified Communications News page 8 Move Toward the Cloud The particular combination of these factors in an organization will push the investment decision toward cloud, on-premises or hybrid models. UC elements are displaying different premises-to-cloud, and cloudto-premises trajectories, depending on the specific element. Overall, most areas will experience a shift away from premises-based toward the cloud, although some will experience the reverse. For example, cloud Web conferencing capabilities are currently more robust than premises-based Web conferencing. But premises-based solution enhancements and improved delivery capabilities for basic Web conferencing will likely expand the share of basic premises-based Web conferencing. Gartner conducted a global End-User Wants and Needs survey in 2013 to gain insight into key IT purchasing behaviors and the shifts occurring within various technology segments. We surveyed more than 2,000 organizations (from small businesses to large enterprises), across vertical industries and geographies (including Brazil, China, Germany and the United States). We then weighted the overall results to represent the business universe in each country. As shown in Figures 2 and 3, premises-based provisioning represents the current mainstream approach for acquiring UC. When respondents were asked to identify their future investment plans, however, there was a shift toward cloud UC adoption. Responses show that, by 2017, about 48% of IT planners anticipate they will acquire UC functionality via a cloud-based approach. Responses vary by region. Trends that we see influencing these adoption rates include the following: Figure 2 Current Main UC Deployment Model Source: Gartner (July 2014) Figure 3 Main UC Deployment Model in Three Years Time As communications move beyond stand-alone, siloed basic applications and into more advanced and integrated communications functionality, some organizations will find that their internal IT departments lack the required skills and expertise to manage this new functionality. Gartner expects a growing proportion of organizations to opt for cloud delivery to bridge the gap in skills. IT planners will increasingly prefer to acquire functionality in a peruser or software-consumption-based provisioning style. Source: Gartner (July 2014)

9 AT&T Unified Communications News page 9 Most providers with historical on-premises-based UC expertise are increasingly investing in their cloud UC initiatives, narrowing the functionality gap between on-premises-based UC and cloud UC functionality. And, as the gap narrows, Gartner expects a growing percentage of IT planners to evaluate and migrate to cloud provisioning options. UC as a service (UCaaS) providers continue to invest in and expand their geographic coverage and provisioning capabilities. This enables them to address more effectively the requirements of midsize and large enterprises that require larger scale or broader geographic service coverage. As providers expand their geographic delivery capabilities (such as channels, infrastructure and support services), Gartner expects organizations in these regions to increasingly evaluate cloud delivery options for their UC uptake. Nevertheless, a certain proportion of IT planners will continue to opt for premises-based UC delivery, regardless of advances in cloud and UCaaS offerings. Some organizations, particularly, large enterprises, will continue to show cultural preferences for premises-based solutions. Or they will be bound by specific security, regulatory or customization requirements that prevent them from considering cloud alternatives; or they will be inhibited for reasons of total cost of ownership. Overall, cloud versus premises-based provisioning decisions will be influenced by a range of factors that will ultimately shape the purchasing decision. Gartner evaluates purchasing criteria and purchasing styles in the following four organization size segments: one to 19 employees, 20 to 99 employees, 100 to 999 employees and 1,000 or more employees. Clearly, other factors significantly influence buying criteria, but overall, UC adoption tends to display some similarities between organizations of similar size. The ratings in Figure 4 reflect correlations in buying behavior by organization size. Broadly: Smaller companies (up to 100 employees) value ease of use and hands-on assistance during the sales cycle. They also tend to prefer off-the-shelf UC solutions. Midsize enterprises (between 100 and 999 employees) value reliability and support for their solutions, as well as prefer to work with companies with similar industry-specific expertise. Large enterprises (1,000 or more employees) view reliability and support as additional important considerations, particularly, across wider geographies. The ability to customize UC solutions and meet the detailed requirements of a particular group of users is also a key factor. Buying Behavior Varies by Organization Size Organizations UC buying behavior also varies depending on their size. Organizations of similar sizes tend to have similar: Internal IT resources (or lack thereof) Requirements for hands-on assistance Preferences for working with providers that can guarantee service and support levels Solutions tailored to their specific business needs

10 AT&T Unified Communications News page 10 UC Technology Trends To get a good understanding of where and when UC opportunities are likely to be found, it s important to consider the different types of technology that organizations will adopt, and how they will be implemented. The main UC technologies are: Telephony Messaging (including voice/unified messaging) IM/presence Figure 4 Criteria for Buying UC Solutions, by Organization Size Conferencing (Web, audio and video) We have listed the key technologies, along with the main influencing factors affecting their adoption in coming years, including provisioning, regional differences, replacement cycles and the introduction of new offers. Hands-on assistance during UC sales cycle Geographic distribution/ support coverage Price competitiveness Up to 19 Employees 20 to 99 Employees 100 to 999 Employees 1,000+ Employees Telephony Several key factors will influence growth in telephony: Off-the-shelf/integrated UC capabilities Existing communications solutions Maturity. Telephony is a mature technology. There is a high level of saturation in certain regions (North America, Western Europe and parts of Asia/Pacific) that will present few opportunities for greenfield implementations. Parts of Latin America, the Middle East and North Africa, sub-saharan Africa and emerging Asia/Pacific will present more significant opportunities for greenfield telephony implementations. Many emerging regions, however, remain highly price sensitive. They are more likely to invest in basic stand-alone telephony functionality, rather than rich communications-enabled UC. Vertical customization Solution reliability Service and support levels Ease of doing business with (provider) Ability to customize Ease of use/ease of management Displacement. Organizations will increasingly use over-the-top solutions, and these will replace a small proportion of telephony sales. Small organizations have different telephony adoption profiles than their large-enterprise counterparts. Some small businesses will opt to use non-enterprise-grade voice functionality to enable voice across their organization. Low Importance Medium Importance High Importance Source: Gartner (July 2014)

11 AT&T Unified Communications News page 11 Provisioning. There is a significant installed base of premisesbased telephony users. A growing proportion of these users will migrate from premises-based, to cloud provisioning styles, partly, to enable elasticity in their voice use, and to switch to more predictable operating expenditure budgeting. To begin with, most migrations were at the low end of the market, but increasingly, larger organizations will migrate. There is a small installed base of Centrex users (representing less than 10% of total users) that will predominantly favor cloud solutions. Messaging Declining value. The value associated with voice and unified messaging is declining as users rely more on data communications, rather than voice communications. This means that revenue from port licenses will likely decline. This is because the average number of users per port will continue to increase during the next two to three years, as use of voice messaging decreases. Used with other UC business applications. Organizations frequently acquire IM/presence as a bundled function that is coupled with other UC applications. Organizations might actually have access to multiple IM/presence applications, but most rely on a single IM/presence tool, failing to activate or use the others. Once an organization standardizes and leverages IM from a particular provider, this becomes an indicator of the influence of desktop and other applications for that provider. Essentially, users can leverage IM/presence in conjunction with their contact list, calendaring tools or conferencing tools to enhance overall communications. It s likely that organizations will make future desktop decisions with the provider that is top of mind in IM status and usage. Unified messaging. Despite the diminishing value of voice and unified messaging, 80% to 90% of employees with a telephony seat license will also have a voice messaging/unified messaging seat. Voice and unified messaging are generally considered standard desktop tools to round out non-real-time communications. Provisioning. The monetary value associated with voice and unified messaging provisioning is reducing, and providers will increasingly bundle them with sales of telephony seat licenses or . Price discounting will gradually erode the revenue associated with voice messaging/unified messaging. Instant Messaging/Presence Bundling. IM/presence has low monetary value. Increasingly, it will be bundled as part of a package, and will not have a distinct monetary value. However, the business value of IM as a tool to enable collaboration is growing.

12 AT&T Unified Communications News page 12 Conferencing Web Conferencing Using more than one service. There will be different types of conferencing services that organizations employ going forward to meet various business needs within the organization. Essentially, many organizations will use more than one conferencing platform or service to meet their business requirements. More freemium conferencing. Uptake of free Web conferencing services (sometimes referred to as freemium conferencing ) will increase. However, these services lack conferencing capabilities that many businesses require (such as security, scalability, recording and control), so will be used in certain use cases only. In certain cases, the freemium approach will encourage some organizations to try it, and then upgrade their conferencing services. Overall, free conferencing services will impact (lower) Web conferencing average selling prices (ASPs). Varies by business size. As with broader UC adoption, takeup of Web conferencing and its ASPs will vary by organization size. Uptake of freemium and consumer conferencing services will be significantly greater among small businesses than larger ones. Midsize and large organizations will more frequently require Web conferencing sessions with advanced capabilities that include security, compliance and file sharing. Organization size. Use of audioconferencing correlates with organization size. Large organizations have higher levels of audioconferencing usage, and higher levels of projected investment than small businesses. Small businesses, particularly those with less than 20 employees, will mostly use free or very low-cost conferencing services. Large enterprises, particularly those with more than 1,000 employees, will more frequently use high-end audioconferencing services, with recording and auto attendant capabilities. In many cases, large organizations will use more than one conferencing service (a tiered approach) to meet their business needs. For example, to support intracompany audio requirements, organizations might rely on a low-cost reservationless audioconferencing service. But they might also rely on high-quality conferencing, with attendant and recording capabilities for external audioconferencing use cases. Provisioning. Web conferencing provisioning models correlate tightly with organization size. Smaller organizations, especially very small businesses, will use cloud-based Web conferencing more often to avoid upfront capital outlay costs. Audioconferencing Different service grades. As with Web conferencing, organizations will employ different grades of audioconferencing service to meet various business needs. Essentially, many organizations will use more than one type of audioconferencing platform or service to meet their business needs.

13 AT&T Unified Communications News page 13 Videoconferencing Mix of video types. Organizations will deploy premises-based videoconferencing in four main forms: Immersive telepresence. Room-based systems. Typically, a 40-inch to 70-inch screen. PC-desktop devices on the LAN. Mobile video. Video on smartphones, tablets and other mobile devices. Better growth for cloud. Overall, growth in cloud-based video (in which the infrastructure is housed in a data center, and users typically pay a monthly fee for licenses and devices) will significantly outpace that of premises-based video (across small or midsize businesses and large enterprises), for several reasons: Scalability Difficulty in determining bandwidth requirements Rapidly evolving pace of technology change, which makes it difficult for organizations to support the latest technology More software implementations. Demand for video will move away from expensive hardware-oriented platforms, to more software implementations (and software endpoints) to support a larger number of users. The market will support various levels of video services, including free video services; standard video (with better quality and reliability) and premium services (such as recording, higher quality, storing capabilities and management capabilities). Evidence Information for this research was obtained using a multifaceted approach: insight obtained from Gartner s End-User Wants and Needs studies, discussions with channel partners and customers obtained through work on MarketScopes and Magic Quadrant documents, and information obtained by supporting vendor and end-user inquiries. Note 1 Unified Communications The UC market includes four key areas: Voice and telephony. This includes fixed, mobile and soft telephony, as well as the evolution of PBXs and IP PBXs. Conferencing. This area includes separate audioconferencing, videoconferencing and Web conferencing functions, as well as converged unified conferencing capabilities. Messaging. This area includes voice mail and unified messaging in various forms. IM and presence. These play an increasingly central role in nextgeneration communications, enabling the aggregation and publication of presence and location information from and to multiple sources. This enhanced functionality is sometimes called rich presence. Move to more-advanced, integrated UC video. UC platforms are increasingly including integrated video as part of their solutions, and are increasingly able to move beyond basic point-to-point video, to offer multipoint video capabilities. Furthermore, other conferencing functions are increasingly becoming video-enabled, improving the ability to move from a Web or audio session to a seamless video session. Increasingly, video will be acquired as part of a unified, versus stand-alone, offer.

14 AT&T Unified Communications News page 14 Furthermore, the UC market can be segmented by provisioning styles. UC can be acquired in a premises-based provisioning model, acquired as part of a service-based or cloud-based provisioning style, or acquired via a combination of the two. Gartner uses the following definitions to distinguish premises-based and cloud-based purchasing styles: Cloud UC or UCaaS: Delivery of UC functionality that is owned, delivered and managed remotely by a third-party provider. The infrastructure is shared multitenant or virtualized, for example. The provider delivers applications based on a single set of common code and data definitions consumed in a one-to-many model, by all contracted customers, at any time. This is on a pay-for-use basis, or by subscription, based on usage metrics. Premises-based UC: Delivery of UC functionality that is provisioned using equipment dedicated for use by a single company. This equipment may be premises-based, or hosted externally in a central office or data center. Geographical hybrid: Features UC elements delivered in different ways, depending on the location of users. For example, users in a branch-office site could obtain telephony functionality via the cloud, while users in a different site or geography could obtain functionality via a premises-based solution. Utility or use-case hybrid: Selects cloud or premises UC delivery based on the UC use case (such as achieving a volume threshold). For example, internal audioconference calls for up to six people could be obtained through a premises-based solution. Conferencing requirements beyond six users, however, could be obtained via the cloud to meet this demand for more capacity. Gartner RAS Core Research Note G , Megan Fernandez, Daniel O Connell, Tom Eagle, 18 July 2014 Note 2 Hybrid UC Provisioning Hybrid UC refers to a blended cloud/premises-based approach for UC functionality. Hybrid UC is typically provisioned in one of three ways: Functional hybrid: Features certain UC functions (like audioconferencing or telephony) delivered via the cloud. Meanwhile, other UC functionality (like videoconferencing and ) is obtained via premises-based solutions.

15 AT&T Unified Communications News page 15 About AT&T AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates-at&t operating companies are the providers of AT&T services in the United States and around the world. With a powerful array of networks resources that includes the nation s fastest mobile broadband network, AT&T is a leading provider of wireless coverage worldwide of any U.S. carrier, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&TU-verse and AT&T DIRECTV brands. The company s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising. For more information on the AT&T UC Portfolio of Solutions please visit UC trends in the enterprise: A 2014 review is published by AT&T. Editorial content supplied by AT&T is independent of Gartner analysis. All Gartner research is used with Gartner s permission, and was originally published as part of Gartner s syndicated research service available to all entitled Gartner clients Gartner, Inc. and/or its affiliates. All rights reserved. The use of Gartner research in this publication does not indicate Gartner s endorsement of AT&T s products and/or strategies. Reproduction or distribution of this publication in any form without Gartner s prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on its website, ombudsman/omb_guide2.jsp AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other AT&T marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies.