Video conferencing services developed by Huawei and ZTE will shake up the market in coming years in the same way the Chinese vendors changed the telecom gear sector, research firm Ovum said on Thursday.
Ovum forecast that business spending on video conferencing would grow annually by 6 percent through 2016 when the global market would be worth $3.8 billion.
The video conferencing equipment market is dominated by established U.S. vendors Cisco and Polycom, but Ovum said Huawei Technologies and ZTE, both small players now, are set to have a major impact on the market in next two to four years.
We expect them to cause quite a lot of disruption, Ovum analyst Richard Thurston said.
Huawei and ZTE together have built up a 30-percent share of the global mobile telecom gear in a few years through aggressive pricing which pushed vendors like Nortel and Motorola out of the business.
Ovum said some parts of the videoconferencing market were set for much higher growth: 19 percent annually for high-end offerings such as telepresence rooms costing some $300,000 each and 11.5 percent for managed services.
Growth of the overall market will be held back by falling prices and corporate usage shifting increasingly to workers' desktops from dedicated conferencing hardware.
This is boosting demand for video technologies companies like venture-backed Vidyo, whose software platform is used by HP, Google, Hitachi, and Ricoh for their video conferencing offerings.
The market for desktop video conferencing is huge and continues to grow with support on smartphones and tablets, said Ofer Shapiro, chief executive of Vidyo.
Ovum's Thurston agreed: Mobile is one of the next frontiers in video conferencing.
Thurston said enterprises were likely to remain the main audience of videoconferencing technology providers as much lower-priced consumer offerings are still struggling to compete against free service from Skype.
(Editing by David Cowell)