Report: Huawei Leads Softswitches
That’s according to fourth-quarter and full-year 2005 “next gen” VOIP equipment sales stats from the telecom research house Infonetics Research Inc. .
Huawei controls 26 percent of the VOIP softswitch market worldwide, Infonetics says, a leadership position the vendor held both in the fourth quarter and for full-year 2005.
Infonetics would not release its estimate of Huawei’s softswitch revenue for the fourth quarter, but said softswitch revenue for all vendors was up 6 percent at $321.1 million. This puts Huawei’s number at around $83.5 million bases on a 26 percent share. (See Huawei Supplies V'fone Phones.)
Softswitches provide the call-control component of a VOIP or multimedia-switching infrastructure. They contain such functional components as call agent, media gateway controller, SIP server and SIP client. (See Who Makes What: VOIP Infrastructure Equipment.)
Western equipment vendors have in the past expressed anxiety at the low price points of Huawei gear. At first glance, one might suspect that price explains the vendor’s softswitch dominance. (See Huawei Gains Ground in HR Survey.)
But Infonetics directing analyst Stéphane Téral says there’s more to it than that.
“'Huawei is cheap’-- we have been hearing that for awhile now,” Téral says. “But now the new thing I’ve heard in 2005 is that Huawei actually has good products that are working as well as those made by Western vendors.” (See Huawei Signs 21CN.)
Heavy Reading analyst Graham Finnie agrees. “Huawei has had success worldwide with [its] softswitch, but the perceived price leadership hides a sophisticated and scaleable product with a range of billing interfaces and a Parlay API for third-party application server deployment,” Finnie writes in a Heavy Reading report.
Huawei’s softswitch leadership is also helped by consumers’ rapid acceptance of VOIP in Asia, where most of Huawei's softswitch sales come from. Asia/Pacific VOIP subscribers now number 14.2 million and will grow 251 percent to 49.9 million by the end of 2009, Infonetics predicts.
Huawei has deep relationships with some of Asia’s biggest VOIP operators -– China Telecom Corp. Ltd. (NYSE: CHA), for example. (See China De-Skyping?.)
Téral says Huawei’s numbers were so high, Infonetics analysts did a double-take. “We had to check who was actually deploying that because we were talking about huge amounts of licenses and huge amounts of ports." (See Huawei Converges on America.) “But after checking, China Telecom did actually deploy that stuff,” Téral says.
Téral believes Huawei is also making inroads in the European market by making headway with Tier 2 carriers – so much so that the Tier 1s have begun taking notice. (See Huawei Lands German Deals.)
Infonetics says Nortel Networks Ltd. leads the North American softswitch market, while Sonus Networks Inc. (Nasdaq: SONS) comes in a close second. Nortel also remains the top vendor of combination media gateway/softswitches, Infonetics says, with Siemens in second place and Huawei in third. (See Nortel & Huawei: Broadband Buddies.)
Téral blames the Huawei’s relative lack of success in North America on its failure to get cozy with incumbent vendors and integrators. He points out that Huawei seems indifferent to the fact that most Americans can’t even pronounce the company’s name.
Overall, 2005 was an explosive year for VOIP equipment, Infonetics reports. Worldwide VOIP equipment sales exceeded $2.5 billion, a 50 percent jump over 2004.
Worldwide revenue for all VOIP gear grew 21 percent to $785.3 million in the fourth quarter, Infonetics says. The Dell'Oro Group , which also published fourth quarter numbers Tuesday, says the softswitch and media gateway market grew 64 percent year over year. (See Dell'Oro: VOIP Gear Up.)
Infonetics says every class of VOIP equipment it follows was up in 2005, and all but media servers and Class 5 softswitches were up sequentially in the fourth quarter.
Infonetics believes the VOIP equipment market will grow 145 percent by the end of 2009, when sales will be $6.2 billion.
— Mark Sullivan, Reporter, Light Reading