CPaaS market hits record high for growth in Q2

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With the industry seeing several new entrants over the past couple of years, including Microsoft and Amazon, the communications platform-as-a-service (CPaaS) industry has continued to mature and, according to a study from the Synergy Research Group, the market is on track to exceed $5bn in 2021, with each of the four major regions driving strong growth.

The CPaaS market has continued to mature over the last year as demand for cloud communications expanded use cases and prompted new suppliers to enter the market. Having been traditionally dominated by Twilio, the current market has seen new entrants arrive, including Sinch, Bandwidth and Vonage – through its acquisition of Nexmo and TokBox.

The likes of Agora, Dolby.io and Daily have also arrived with a focus on IP-based communications employing web real-time communications (WebRTC). But most industry watchers are looking to Amazon and Microsoft to really shake things up, given their status as leading cloud computing suppliers.

The CPaaS market has evolved beyond basic application programming interfaces (APIs) for messaging and voice capabilities to address more sophisticated use cases that can be tailored to vertical markets. According to research from IDC, global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.

Since the pandemic began, new CPaaS use cases have emerged around telehealth, e-commerce and retail. In addition to the typical use case of text message appointment reminders, healthcare groups can use CPaaS to enable virtual waiting rooms and remote patient monitoring.

Programmable video is another growth area as firms have replicated in-person communication with video. Programmable video use cases include video banking, video-assisted sales and customer support.

The Synergy Research Group study found that for the second quarter of 2021, the CPaaS market grew by more than 40% worldwide, with Twilio maintaining its number one market share ranking. Synergy measured sevenfold market growth for the CPaaS market over the last 18 quarters, and the fastest year-on-year growth, exceeding 55%, was found in the APAC region.

Although Twilio was still the clear worldwide market share leader, suppliers such as Vonage, Sinch, Bandwidth, MessageBird and 8×8 were found to have stronger market share positions across the regional markets, driven by their successful focus on areas of local expertise. This, said the analyst, was illustrated in the APAC region, where Vonage was the top CPaaS vendor, followed by Twilio and Sinch.

“Today the primary application for CPaaS is consumer-based SMS, providing transactional connectivity between mobile devices and emerging cloud services,” said Fazil Balkaya, principal analyst at Synergy Research Group. “We believe the technology is poised to provide significant enhancements to business communications and sophisticated customer service applications, driving this market to the $14bn mark by 2025. 

“We believe we are at the beginning of the CPaaS evolution as sophisticated customer engagement and advanced communications can become the key building blocks of future communication tools.”

Looking ahead, Synergy said the CPaaS market continues to demonstrate strong growth, and the current momentum will provide a solid foundation for increased development of communication and software technologies, creating and enhancing new customer interactions and experiences.


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