VoIP market evolves in 2007

And while it seems that every year is billed as VoIP's, Infonetics is quick to point out that IP PBX sales are increasing rapidly as TDM sales enjoy a small increase that will lead to an inevitable plummet.

"A number of important developments are sure to inject a jolt or two of excitement into the enterprise telephony market this year," said Infonetics' directing analyst Matthias Machowinski.

So far this year, sales of pure IP PBX systems have increased 3% in the first quarter over the previous quarter and are up 76% from the first quarter last year. Also, traditional TDM PBX phone system sales saw a slight jump in revenue in 2007's first quarter, after five consecutive quarterly losses. But TDM PBX sales are positioned to decline steadily through 2010, with a compound annual growth rate dropping into negative percentages.

According to Machowinski, key developments in the VoIP market this year will further stoke the VoIP fervour. As overall enterprise telephone revenue is on track for another year of double-digit growth, the first quarter of 2007 saw worldwide total PBX/KTS system sales inch up 1% and rise 8% compared with the previous year.

By 2010, the telephony market will have reached the $11.9 billion mark.

Hybrid PBXs will also see dramatic growth, as hybrids represented 63% of all PBX/KTS system line shipments worldwide in the first quarter of this year. That is expected to increase to 72% by 2010.

And though growth is expected, Infonetics was quick to point out that the enterprise telephony market in 2007's first quarter was flat in North America, weak in Europe, and strong in Asia Pacific.

As for market leaders, Avaya, which was recently bought out by two private equity firms to the tune of $8 billion, was the market share leader in IP PBX revenue for the first quarter this year, followed closely by Cisco and Siemens. Cisco maintains the lead in IP desk phone and soft phone sales, however, with more than half of the units shipped worldwide.

And the evolving market, with Microsoft and other major players poised to make key VoIP and unified communications related announcements this year, will fuel VoIP growth even further, Machowinski said.

"Microsoft is launching OCS [Office Communication Server] 2007, and the question on everybody's mind is: What's the market impact?" he said. "Will buyers abandon their PBXs in favor of a pure unified communications solution? We don't think so, at least for the short term."

Unified communications deployments and Microsoft's push toward software-heavy VoIP deployments could change the market's direction, but vendor consolidation will also strongly influence where telephony moves.

"Also, vendor consolidation is heading up again: Inter-Tel and Mitel are planning to merge," Machowinski said. "And then there's ShoreTel's IPO, which is just around the corner. So this should be an interesting year for the PBX market."