Microsoft Now No. 2 in UCaaS, Only Chasing RingCentral

Microsoft jumped to No. 2 in global UCaaS in the first quarter, adding more than 1 million subscribers in the past year.

That’s according to new data from Synergy Research Group. It examines UCaaS momentum as the on-premises PBX market moves to the cloud. RingCentral by far dominates UCaaS market share.

Microsoft is up from No. 5 two quarters ago to being the second-biggest UCaaS operator in the first quarter. The good news for all UCaaS operators is that the vast majority of users are still using on-premises PBX systems; therefore, the conversion to cloud-based solutions is still in its early phase. There is a very long runway of growth ahead of them.

Jeremy Duke is Synergy Research Group’s founder and chief analyst.

Synergy Research’s Jeremy Duke

“While RingCentral remains in a field of its own, there is a battle going on among the chasing pack of UCaaS providers,” he said. “Microsoft was late to the party, but is now growing strongly and is doubling its UCaaS subscriber base every six months. The other two particularly high-growth providers are Zoom and Fuze. While neither of them make the top six when ranked by revenue, they both passed the 1 million subscriber mark this quarter. The good news for all of the vendors is that this is still early days for UCaaS. And there are many years of high growth ahead as the vast PBX installed base gradually transitions to cloud-based services.”

On-Premises PBX Fading

The number of on-premises PBX users continues to erode as UCaaS and hosted PBX solutions gain favor and eat into the market. The on-premises PBX share of total users is only dropping by one-half of one percentage point per quarter. However, that represents strong growth for the much smaller UCaaS and hosted PBX segments.

In the first quarter, the number of UCaaS users grew by 46% year-over-year. Microsoft has been the biggest beneficiary of that UCaaS growth. RingCentral continues to lead the market by a wide margin, while the other leading UCaaS providers are Mitel, 8×8, Vonage and LogMeIn, Synergy said.

Ranked by subscribers rather than revenue, Cisco, Zoom and Fuze all feature more prominently.

Total UCaaS subscriber numbers are now over 17 million and have doubled since the end of 2018. Growth is strong in all regions; however, the United States continues to dominate the global market. It accounts for more than three-quarters of all UCaaS subscribers.

Market development is still in the early days in most other countries, with only the United Kingdom, Germany and Canada having a reasonably substantial base of UCaaS subscribers.