But convincing the wider business market is a different matter altogether, and it raises a couple of key questions:
- What's happening to enterprise VOIP? Is the residential market blazing a trail in VOIP that business users will follow, or is the opposite the case?
- When and if the enterprise VOIP market takes off, who will be the big beneficiary?
In most cases, these announcements are really toe-in-the-water type trials that vendors are attempting to pump up, in the hopes of convincing other enterprises to make a move in the direction of VOIP.
The truth is that rolling out VOIP networks in enterprises is a totally different cuppa tea from an individual (like me) choosing to download and use Skype.
On the one hand, VOIP holds out the promise of delivering a lot more than a replacement of PBX networks – such as presence services, unified messaging, and conferencing. For more on this, check out SIP Hosted Services: A Heavy Reading Competitive Analysis, the latest report from Light Reading's paid research division.
On the other hand, enterprises aren't going to scrap their huge investments in PBX networks overnight. They also face all sorts of other challenges – notably, having to upgrade their internal IP infrastructure to carry VOIP and dealing with firewalls and network address translation (NAT) schemes that make it difficult to receive incoming VOIP calls.
The business case for rolling out VOIP in enterprises also isn't clear-cut. It's true that IP PBX phone prices have come down. You can now get an IP PBX system for between $500 and $900 per user, including phones. But the true cost savings are only there for enterprises willing to go all out with VOIP across their entire company, and that's a big commitment to make, as already noted (see Heavy Reading Sees Money in SIP). LAN upgrades can also hack at any savings, bumping up the cost of a new IP PBX system significantly.
So, Question No. 2: Which companies are well positioned to cash in on enterprise VOIP, if and when it really takes off?
I've just completed a study entitled "VOIP: The Enterprise Options" for Light Reading Insider, the subscription research service of Light Reading, and here's what I think:
The lion's share of IP PBX customers will opt for CPE-based equipment and will likely choose between products from Cisco Systems Inc. (Nasdaq: CSCO), Avaya Inc. (NYSE: AV), and Nortel Networks Ltd. (NYSE/Toronto: NT).
LAN dominance counts for a lot, and Cisco, the current IP PBX market leader, holds the market by its short and curlies, only guaranteeing service-level agreements (SLA) on its own LANs. Other companies are forging their own LAN/IP PBX relationships, with Avaya and Extreme Networks Inc. (Nasdaq: EXTR), for example, forming a partnership intended to rival Cisco's single-sourced advantage (see Avaya & Extreme Team on VOIP).
Avaya and Nortel, the legacy PBX market leaders, will also naturally prosper from their installed base and are cementing their presence in the IP PBX market with new products to match the requirements of enterprises of different sizes.
Should an enterprise take the uncharacteristic step of outsourcing, there are a number of hosted IP PBX and IP Centrex providers, using equipment from vendors such as Sylantro Systems Corp. and BroadSoft Inc., that are gunning for enterprise dollars.
But will enterprises really overhaul their legacy of in-house PBXs with an outsourced option? I think not. The cost-sensitive SMB market will most likely adopt hosted services in the short term. Enterprises, meanwhile, will deploy IP PBXs in tentative, measured steps that will only outweigh TDM beginning in 2007. It's anyone's guess which vendors will benefit as enterprise VOIP becomes more commonplace, but I wouldn't be surprised if Cisco remains king of this castle.
— Daro Clark, Research Analyst, Light Reading
To subscribe to Light Reading Insider and obtain a copy of its latest report, "VOIP: The Enterprise Options," simply click here.
"SIP Hosted Services: A Heavy Reading Competitive Analysis," a 56-page report by Margaret Hopkins, costs $3,495. For more details, click here.