VoIP Forecast

We've seen the future and the future is VoIP.
It's Not Too Late to "Get in on the Ground Floor," But You'd Better be Leaning on the Elevator Button.

The IP PBX market prepares for take-off.

It happened in 2005. Orders for IP PBX lines exceeded those of traditional PBX (In-Stat). The report predicted that the vast majority of the 6.6% annualized PBX market growth rate through 2009 would be IP.

An In-Stat analyst opined that "with closer ties to data, this new vehicle is influencing corporate power structures and will ultimately have even more far-reaching effects on how business is done around the globe."

Market research firm Dell'Oro Group forecasts a three-fold increase in IP PBX sales to a projected US $ 2 billion by 2010. Their report also predicted that sales of IP telephones would exceed $ 4 billion by that year.

According to the report, other PBX segments are not expected to fare so well by 2011. Hybrid IP/TDM PBX revenues are predicted to decline starting in 2010, and by 2011, traditional PBXs are projected to make up less than five percent of the total market revenues.

Strategic research firm Atlantic-ACM predicts that the sector will grow from US $ 6.4 billion (£3.2 billion) in 2006 to $ 15 billion (£7.6 billion) in 2012. The market for business VoIP and IP VPN (virtual private network) services is due to more than double over the coming five years, according to new figures.

The European IP PBX market is hot.

A 2006 study by Frost & Sullivan, focused on the European market, demonstrated strong growth in the sub 100 port segment. They found that pure IP PBXs accounted for around 26% of shipments in the MLE sector and 11% in the SME and SoHo sectors. TDM PBXs with no IP capabilities amounted to only 4% of total lines shipped.

Frost & Sullivan reported that the EMEA Unified Messaging and Communication Markets earned revenues of €613.3 million in 2005 and estimates this to reach €1,539.5 million in 2012. The EMEA IP telephony and VoIP access services market totaled €589.7 million in 2005 and predicts €78.66 billion by 2011.

According to IDC's Western European VoIP Applications Forecast and Analysis 2007–2011, the market for VoIP applications in Western Europe was worth US $ 194.8 million in 2006; by 2011 this market is expected to have grown to around $ 2.25 billion, with a CAGR of 63.1%.

The study found that enterprises are becoming increasingly interested in VoIP applications. IDC expects that growth in VoIP applications will predominantly be driven by unified communications applications, mobility applications tied to IP PBX functionality and vertically-oriented applications running on IP PBXs and IP telephones.

Unified Communications becomes a driver.

In an April 2007 study, Infonetics Research forecast the percent of small organizations using VoIP to more than triple and the percent of medium and large organizations using VoIP to roughly double between 2006 and 2011.

"The big story in the enterprise VoIP space these days is unified communications, or UC, which integrates multiple communication modes (desk phone, mobile phone, e-mail, chat, etc.) into a single communications experience. Companies are putting the foundation for UC in place, as illustrated by the top two VoIP applications deployed, directory and unified messaging, which together form the cornerstone of UC," the survey concluded.

Small businesses need VoIP guidance from IT professionals.

Access Markets International (AMI) Partners, Inc. found that small and medium businesses worldwide feel confused by the multiple and complex range of VoIP solutions. Despite all the hype about VoIP’s projected toll cost savings, productivity improvements and a more professional market presence, most SMBs are unable to evaluate and decide which VoIP solution is best for them.

"The market opportunity for VoIP solutions is burgeoning for SMBs," an AMI-Partners spokesperson said. "Whichever solutions or vendors SMBs choose, most companies will move to VoIP over the next five years—creating a huge opportunity for equipment vendors, service providers, and VARs."

AMI-Partners found that most small businesses are confused about the multiplicity of VoIP solutions available (premise-based IP-PBX, managed IP-PBX, hosted VoIP, broadband VoIP, peer-to-peer VoIP).

"The complexity involved in understanding and evaluating the different solutions and vendors, coupled with a lack of voice-savvy IT resources, is delaying what is an otherwise rapid-paced migration of SMBs to VOIP," the report concluded.

According to AMI estimates, the global SMB market for VoIP solutions was worth about US$ 3.26 billion in all of 2006--up 26% over 2005.

SIP Trunking vs. Hosted IP PBX

While hosted IP telephony service providers like Covad and Quintum have demonstrated success, SIP trunking providers like BandTel, Cbeyond, the cable companies and others have been amassing more lines. Frost & Sullivan forecasts that in 2012 SIP providers will sell more than double the number of lines their hosted counterparts will.

The number of hosted IP telephony seats in North America is expected to grow from 697,000 in 2006 to 7.22 million in 2012, while the number of SIP trunking lines will increase from 950,000 in 2006 to about 14.52 million in 2012.

The research firm says the primary reason for this is simple: the sale for SIP trunking is easier. "A VoIP trunking sales engineer need only pitch the twenty percent operating expense savings, introduce the integrated access device, explain the benefits of value-added applications and, possibly, extend the life of existing legacy equipment."

In contrast, the hosted IP PBX sale is "much more difficult."

"Customers must evaluate the solution and determine extra costs for writing off their existing equipment and refurbishing their infrastructure including LAN and desktop phones," the researchers write in their white paper.

As a result, the average sales cycle for a SIP trunk is roughly two weeks while the average sales cycle for a hosted IP telephony seat tends to be four times as long.

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