Enterprise VOIP Is on Fire

Enterprises around the world are going IP with their PBXs in a big, big way, according to a new Infonetics Research Inc. report (see Infonetics Reports on IP PBXs).

Pure IP-based and hybrid PBX systems accounted for more than half of new system sales in the second quarter and are expected to make up 92 percent of new PBX sales by 2008. That's a whopping $8.34 billion slice of the market.

TDM-based PBX systems sales, meanwhile, will bring in only $760 million in sales by 2008, Infonetics says.

Infonetics says full-year 2004 PBX revenues were $6.1 billion, an 11 percent increase over the 2003 total of $5.5 billion.

Residential VOIP equipment sales, by contrast, amounted to only $1.73 billion worldwide in 2004. Infonetics expects that number to grow to $5.8 billion by 2008 (see VOIP Equipment Revenue Up 18%).

“Especially for larger organizations, they are very interested in the overall goal of converging their networks,” Infonetics analyst Matthias Machowinski tells Light Reading. “To make the network more efficient you might have a lot of branches that you need to manage from a central location.” Machowinski says IP-based PBX systems facilitate this -- ATM-based systems do not.

Also important is that IP PBX systems offer more operational cost savings over traditional circuit-switched PBX systems (see Avaya, Nokia Converge).

Today TDM systems are still selling well, accounting for almost half of second-quarter PBX shipments. They are not, however, as profitable as the newer IP and hybrid PBX systems, the Infonetics numbers suggest. TDM-based systems fetched only 26 of the total money spent on PBX systems in the second quarter.

Hybrid IP and TDM PBX systems made up 42 percent of second-quarter units shipped, yet accounted for 58 percent of the revenue (see NetCentrex Acquires IMS Smarts).

Pure-IP based units made up 9 percent of units shipped but made up 16 percent of the revenue -- a 17 percent jump from the first quarter, Infonetics says. The firm expects pure IP systems to bring in 23 percent of all PBX revenue in 2008.

The results can be seen as testament to the maturity of the field of IP PBX products now available. Infonetics believes that most IP and hybrid PBX suppliers saw sales numbers grow in the double-digits in the second quarter of 2005 (see IP PBX Market Heats Up). “The battle for IP PBX line market share in North America continues, with Nortel leading and Cisco passing Avaya this quarter,” says Machowinski.

Worldwide, the list of top players was slightly different. Alcatel (NYSE: ALA; Paris: CGEP:PA) is the top IP PBX system vendor based on worldwide lines shipped, followed by Nortel, Avaya, Cisco, and Mitel Networks Corp. (see NTL Partners With Mitel).

Total PBX revenues grew 12 percent to $1.6 billion in the second quarter and will total close to $7 billion for full-year 2005, Infonetics forecasts.

— Mark Sullivan, Reporter, Light Reading