Light Reading
Frost & Sullivan sees 77-fold increase in North American sales of residential VOIP adapters and phones by 2007

Residential VOIP Will Boom, Says Study

Light Reading
News Analysis
Light Reading
5/12/2004
50%
50%

In a new report, research firm Frost & Sullivan says explosive growth in the North American residential voice-over-IP (VOIP) market during the next three years will be accompanied by a 77-fold increase in sales of “endpoints” -- that is, analog telephone adapters (ATAs), VOIP residential gateways, IP phones, and session initiation protocol (SIP) phones.

That’s good news for companies like Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT), which make ATAs, the little boxes that connect an analog telephone to a broadband modem. D-Link Systems Inc. and Telco Systems (BATM) will also benefit as suppliers of VOIP residential gateways, which are like ATAs with built-in routers. But ATA and gateway makers will eventually face stiff competition from vendors like Clarisys and Grandstream Networks Inc., which make IP and SIP phones -- handsets that don’t require an adapter box to link to a broadband connection.

Frost & Sullivan predicts that sales of residential VOIP endpoints in the U.S. and Canada will grow from $9 million last year to $700 million in 2007. Right now, ATAs account for most of those sales, since few consumers are ready to throw out perfectly good analog phones, and popular residential VOIP service providers like Vonage Holdings Corp. supply ATAs to all of their customers (see Vonage Claims VOIP First). “The ATA will probably remain the dominant device for at least another year or so,” says Jon Arnold, a Frost & Sullivan analyst and author of North America Residential VOIP Market: Everybody’s Talkin’ at Me.

But that will change as residential VOIP service proliferates and consumers replace old handsets. “Ultimately, we’re all going to be using SIP phones or IP phones because that’s just the way the world’s going to go,” Arnold says. “But we’re a long way from that being the norm.” One inhibitor is price. Most SIP and IP phones cost more than analog phones, but prices will drop as sales volumes grow. “In 2007, ATAs will still remain the biggest piece of the puzzle, but the growth of ATAs is going to slow down, and you’re going to see the growth of IP phones accelerate quite a bit."

Frost & Sullivan also foresees strong growth in sales of VOIP residential gateways because they offer more functionality than ATAs. Many gateways come with built-in routers and can support twice as many phone lines as ATAs. As prices for the products drop, “gateways will simply offer more for less,” Arnold says.

VOIP endpoint sales will grow about two-thirds as much as the number of VOIP subscribers in the same period, Frost & Sullivan says. The firm predicts that the number of residential VOIP subscribers in the U.S. and Canada will rise from 100,000 last year to 12 million in 2007.

Frost & Sullivan’s report emphasizes that newcomers like Vonage -- and not incumbent carriers -- will lead the charge into VOIP. Of particular interest to the firm are peer-to-peer VOIP startups like Skyper Ltd., whose free Skype software lets people use PCs to talk over the Internet and bypass the public switched telephone network (PSTN) (see VCs Pump $18.8M Into Skype ). “Within a year or so, these services will be able to connect to the PSTN,” Arnold says. “Then the idea of making free phone calls to anybody is a pretty powerful proposition.”

The trouble is, Skyper will have to pay access fees to long-distance and local carriers, and so far, the company has yet to collect a penny from anyone who uses its free software (the company says over 11 million copies of its program have been downloaded). Skyper has told many reporters that it will eventually charge customers for premium features like PSTN termination.

— Justin Hibbard, Senior Editor, Light Reading

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
arch_1
50%
50%
arch_1,
User Rank: Light Beer
12/5/2012 | 1:48:20 AM
re: Residential VOIP Will Boom, Says Study
Why does Light Reading care about VoIP? LightReading is supposed to be about high-speed optical and the things that affect it.

The equipment in this article is sold at retail, and costs <$100.

Please don't tell be that VoIP is the next bandwidth-eating killer app. The numbers just don't work. Total data exceeded total voice years ago, so even if every single consumer shifted from POTS to VoIP instantly, the total bandwidth would increase by at most a small amount. The number of local land-line telephones is decreasing, not increasing, because of increased use of cell phones. This cuts into the VoIP market (at least until there is a shift to WLAN-enabled cell phones.)

Another calibration point: A heavy residential broadband user might reach the 2GB/month "cap" imposed by some ISPs. This is equivalent to 6Kbps, continuous, 7x24, for the whole month. VoIP is <64Kbps, non-continuous, while the phone is off-hook: call it 10Kbps average while the phone is off-hook. To double broadband usage, the user would need to be off-hook for 16 hours a day, every day.
lastmile
50%
50%
lastmile,
User Rank: Light Beer
12/5/2012 | 1:48:19 AM
re: Residential VOIP Will Boom, Says Study
"Please don't tell me that VoIP is the next bandwidth-eating killer app. The numbers just don't work"

VOIP is certainly not a bandwidth-eater but it will kill POTS.

If POTS has to be replaced with something that generates revenue (and competes with cable),it has to be optical.

arch_1
50%
50%
arch_1,
User Rank: Light Beer
12/5/2012 | 1:48:16 AM
re: Residential VOIP Will Boom, Says Study
Not just storage per se. I am starting a business at home. I'm capped at 2GB/mo (residential cable modem) and my terms of service preclude running a server anyway. My service is about $40.00/mo.

Therefore, I rented a virtual server at a hosting provider. It costs $20.00/mo. I have 4GB of disk and 25GB/mo transfer: more than ten times the transfer at half the price: My home bandwidth costs 25 times as much as my hosted bandwidth.

I note that you say:
"Especially the way RoloStar.Com is implementing network storage. They are now giving away 50 MB of network storage for storing and sharing documents. At this rate, they will need more than a TeraByte of storage to support their customer base. Good for the storage industry i guess."

Please note that raw storage is very cheap. You can build a terabyte store for <$1000, in one tower case. In the SAN market, storage currently costs about 20 to 50 times this. The price is artificially high,and will crash with the advent of "storage virtualization" techniques. If you don't believe me, look at Google. Google has perhaps the biggest data store on the planet, and they use cheap IDE disks, not fancy SANs.
technonerd
50%
50%
technonerd,
User Rank: Light Beer
12/5/2012 | 1:48:03 AM
re: Residential VOIP Will Boom, Says Study
Look, kids, Frost & Sullivan like so many other contract research outfits, is in business to tell their clients what they want to hear. Be skeptical of anything they say.
jzaback
50%
50%
jzaback,
User Rank: Light Beer
12/5/2012 | 1:40:00 AM
re: Residential VOIP Will Boom, Says Study
After much research, I just signed up with a new VoIP service for my home and I am 100% satisfied! Anyone who is interested should check out www.wipphone.com. Enjoy!
Flash Poll
From The Founder
Is your network built on 'The Old IP,' or are you part of 'The New IP' revolution?
LRTV Documentaries
A Cultural Shift for an OTT World

9|26|14   |   01:41   |   (3) comments


Telcos need to embrace a new approach to partnerships if they are to generate extra revenues quickly and give customers what they want.
LRTV Documentaries
New Skills Needed as Telecom, IT Collide

9|26|14   |   4:07   |   (1) comment


As telecom and IT collide, new technologies are emerging, new skills are needed and new opportunities for women are arising.
UBB Forum News
Do IP Networks Need An Overhaul?

9|25|14   |   02:01   |   (0) comments


As traffic levels ramp, do IP networks need new technologies and topologies?
LRTV Documentaries
Sprint Wields Its Influence in the Valley

9|25|14   |   3:09   |   (11) comments


Anne-Louise Kardas, Sprint's connection to startups in the Valley, explains how telcos can be innovative and find new opportunities with partners.
LRTV Documentaries
SDN, NFV & The Future of XO's Network

9|25|14   |   3:47   |   (1) comment


XO Communications COO Don MacNeil explains how cloud, SDN and NFV are altering its network requirements as well as changing data centers of the future.
UBB Forum News
The OTT Conundrum

9|24|14   |   01:39   |   (0) comments


What is holding back prosperous partnerships between telcos and the OTT players?
LRTV Documentaries
Putting Broadband to Work

9|24|14   |   01:26   |   (0) comments


High-speed broadband network rollout is key to telco strategies, but it's what happens after the network is built that counts.
Light Reedy
Light Reading's Women in Telecom Recap

9|24|14   |   0:55   |   (4) comments


Our first Women in Telecom breakfast was a huge success, and we hope you'll join us in London for the next event on November 6.
UBB Forum News
Monetizing Ultra-Broadband

9|24|14   |   01:43   |   (2) comments


Ultra-broadband networks need to be built, with fiber-to-the-premises the ultimate goal, but they need to be monetized, too.
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Half of the world's population will be connected to the Internet by 2017, but not just by smartphones and desktops.
Hot Topics
Facebook Pokes Around LTE Direct
Sarah Reedy, Senior Editor, 9/25/2014
Is Redbox Instant Shutting Down?
Mari Silbey, Independent Technology Editor, 9/30/2014
Sprint Wields Its Influence in the Valley
Sarah Reedy, Senior Editor, 9/25/2014
US Ignite Cultivates Gigabit Apps
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/25/2014
Like Us on Facebook
Twitter Feed