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Will the pandemic drive further UCC industry consolidation?
COVID-19 may drive further UCC industry consolidation as vendors look to develop new capabilities to support the communications needs created by remote and hybrid work.
Consolidation happens in all sectors and often with more than one wave. We have seen a few consolidation waves in the unified communications and collaboration space. Going into 2021, there isn't much left to consolidate beyond small players rolling up to boost their reach. The big moves have been made among the majors who will continue to dominate the market.
That said, the pandemic has created a new set of business needs and value drivers that all providers are trying to address. Initially, there was a pressing need to support work from home, which drove many businesses to accelerate their cloud migration plans. Now that remote work has become a long-term strategy, UCC vendors need to adapt their offerings.
This has given rise to new UCC applications to keep remote workers engaged and productive -- not just for their jobs, but for physical and mental wellness as well. Add to that an emerging set of endpoints and products to help remote workers create a proper workspace environment. Much of this is new for UCC vendors, and some will choose to make acquisitions to keep pace.
UCC industry consolidation will also come from the next phase of the pandemic: the return to the office. While nobody expects to revert completely back to a pre-pandemic workplace, both employers and employees want some degree of return. To succeed, businesses must rethink the entire workplace experience, and in turn, UCC services must provide new capabilities.
There is a lot of innovation happening, and much of it is AI-driven, especially for tracking space usage and movement of workers around the office. UCC vendors must adapt on the fly, and as return to office gains momentum, they will likely make acquisitions to keep pace.
Many of these missing pieces will come from new or specialized companies. UCC industry consolidation here will be about major players acquiring these smaller players. There will also be cases where the missing pieces come from companies too big to acquire -- in which case, vendors will approach strategic partnerships.
For any of these scenarios, the main takeaway is that the pandemic is creating new needs that most UCC providers cannot address organically. They don't have the luxury of time to develop them in-house, so expect to see ongoing forms of consolidation driven by these emerging sets of needs.
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