The worldwide market for enterprise collaboration software hit a new all-time high in the fourth quarter of 2017, growing by just under 10 percent for the year, according to new data from Synergy Research Group.

Synergy’s latest report, released today, shows that revenue from collaboration software, which encompasses enterprise voice, unified communications applications, telepresence, email and enterprise content management, were just shy of $10 billion.

More significant perhaps is that the report also shows strong growth in cloud-hosted collaboration solutions, which saw revenue rise by 26 percent in the quarter from a year ago. Meanwhile, revenue from on-premises collaboration software declined 4 percent.

That makes bad reading for Cisco Systems Inc., which is ranked by Synergy as the overall market leader, but only just. Cisco narrowly leads Microsoft Corp. in the market, but while its revenue share has largely remained stable over the last year, Microsoft saw a slow but steady increase throughout. Cisco’s lead was several percentage points ahead of Microsoft at the start of the year, but reduced to less than a percentage point by the fourth quarter.

The problem for Cisco is that its overall lead is mostly thanks to its on-premises collaboration products. But Microsoft sits comfortably ahead of it in the fast-growing cloud collaboration segment, where it also displays much faster growth than its main rival.

Cisco may have some hope of retaining its overall lead, however, since it has made concerted efforts to up its cloud collaboration game in recent months. Last October, for example, the company acquired communication software and service provider BroadSoft Inc. for about $1.9 billion, with the aim of deploying its cloud-based calling and communications services through the latter’s hardware products.

IBM Corp. and Avaya Inc. trail Cisco and Microsoft by some distance, but Synergy founder and Chief Analyst Jeremy Duke noted that things could change because the market is becoming increasingly fragmented by disruptive, high-growth startups such as Slack Inc.

“We are now having to track 160 different vendors and service providers in order to really understand the market,” Duke said.

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