More and more companies are rolling out software like Microsoft Teams and Slack, making the collaboration software market a booming business, according to Synergy Research Group. Spending on team chat applications is set to grow substantially this year as demand for collaboration and unified communications (UC) software continues to boom, according to a forecast from Synergy Research Group. Quarterly revenues are now at an all-time high, according to the analyst firm, and are set to continue “growing steadily” for the next five years. Third-quarter revenue in 2018 almost topped $11 billion, with final quarter numbers expected to be “substantially higher.” Overall, the market for collaboration software is set to grow 9% this year to more than $45 billion globally, buoyed by several high-growth market areas. Big gainer: Team chat apps The biggest growth is forecast for spending on team collaboration apps such as Slack and Microsoft Teams; it’s expected to rise 60% compared to last year, with spending expected to reach $500 million during 2019. Other fast-growing market segments include Video as a service (VaaS) and Communication Platform as a Service (CPaaS). Both are set to see 30% growth. Explaining the growing popularity of team chat apps, Jeremy Duke, founder and chief analyst at Synergy Research Group, said the tools gained early traction with tech-focused organizations and innovative startups that wanted alternatives to traditional UC offerings. That adoption is now becoming more widespread across a variety of enterprises – and Microsoft last week made a play for greater influence in the education market. “Our research shows market adoption has progressed … since the early days and what we are now seeing is adoption to larger organizations in Medium to Large Enterprises,” Duke said. The result is a “hockey stick growth curve” for the market, he said. Not surprisingly, that caught the attention of established UC vendors who entered the market in the last few years following the success of Slack. Slack, which is reportedly preparing for a direct stock exchange listing, has seen the most “noteworthy” growth, according to the firm, with revenues doubling in the past year. According to the company’s most recent adoption figures, Slack now has 8 million paid users. In 2017, Slack claimed approximately $200 in annual recurring revenues. Among the other fast-growing vendors are Twilio, BroadCloud (Cisco), Zoom, Fuze, Dropbox, RingCentral and LogMeIn (Jive). It is the large tech vendors that account for the bulk of the overall collaboration software market. Cisco, which sells a range of UC, collaboration and contact center products, will retain its lead in overall revenue generation, having further outdistanced second-placed Microsoft in the last quarter. A Synergy Research report from last year showed that Cisco now accounts for the largest share of the on-premise software market, although Microsoft has seen success with cloud and hosted collaboration apps. Cloud collaboration gains converts Synergy’s latest data also highlighted an ongoing shift away from on-premise collaboration software deployments; they’re predicted to decline 3% even as spending on cloud and hosted products increases 19%. Revenues for cloud and hosted software now account for 64% of the total, with on-premises products making up the the rest. That marks a clear shift from a year ago, when the two were roughly on par. According to Duke, Synergy’s research indicates the on-premise market will continue to contract. “We believe on-premise is primarily an installed base play,” he said. “We do not see large new sales of traditional UC being sold, most are being sold into a large installed base.” He notes, however, that the UC installed base is “enormous,” so while revenues are not growing, there is a “sizable amount of revenue still being spent that will continue for years to come.” Related content news Zoom offers AI-based updates to its Workplace collaboration space The company's Workplace collaboration space gets several user interface upgrades over its previous version. 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