Changing Technology Shakes Up Fax Services Market, According to IDC

FRAMINGHAM, MASS., MARCH 1, 2000 — The fax services industry is in the midst of change. Although traditional broadcast and production fax services make up nearly 90% of worldwide fax services revenues today, integration with the Internet, email, and unified messaging will cause revenues from this segment to fall to 55% in 2003. According to IDC, fax service providers (FSPs) are getting creative and finding ways to exploit the Internet’s infrastructure to drive business and cut costs.

Despite a number of factors threatening to infringe on the prosperity of the overall fax services market, worldwide revenues will climb from $1.2 billion in 1998 to $3.2 billion in 2003. "FSPs tend to be the Rodney Dangerfields of Wall Street, with stock prices getting no respect because observers believe email will make fax services obsolete," said Peter Davidson, manager of IDC’s Fax research. "Their true value, however, was acknowledged when two leading providers of email services each acquired a major fax services provider."

As traditional fax services lose some momentum, the outsourced fax and computer-based fax segment of the market is picking up the slack. This product category, which is intended to provide fax server-like functionality without requiring on-site equipment, is expanding as dozens of new providers dive in head first. Worldwide revenues will reach $1.1 billion in 2003, and total pages transmitted will increase at a compound annual growth rate (CAGR) of 66.7% from 1998 to 2003. "Demand for outsourced and computer-based fax services is high because these services cut across a range of business sizes — including many home offices that use the services in place of having fax machines," Davidson said.

The final segment in the fax services market is fax-to-emailbox and unified messaging services. These solutions involve relaying non-email messages so they are ultimately accessible through the user’s emailbox. This segment of the market has been jump-started by a free service model, which has breathed new life into the market, but may ultimately threaten its existence.

Key Findings

–Although ecommerce threatens to replace much of the current ad hoc fax machine fax traffic involving invoices and purchase orders, the use of enhanced fax services as complements to ecommerce services will boost overall fax service traffic.

–Outsourced fax services have tremendous potential in many Asian markets that are in part skipping over the era of the LAN and going directly to Internet connectivity.

–Although offers of free fax-to-mailbox and unified messaging services gave the market initial momentum, that momentum is slowing. Going forward, the critical issues involve converting users to paid services and targeting corporate accounts more than individual users.

Data for IDC’s new report Worldwide Facsimile Service Market Review and Forecast, 1998-2003 (IDC #B21675) was compiled through phone interviews with marketing and product management executives at leading PSTN and IP fax service providers, independent sales agents and fax server vendors active in co-marketing fax services, corporate buyers of enhanced and IP fax services, and a number of secondary services.

To order the report, contact Sally Donovan at 508-935-4219 or sdonovan@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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