AMSTERDAM -- During the first quarter of 2005, the European IP telephone market increased to a value of $79.3 million, compared with $77.1 million in the fourth quarter of 2004. Shipments of IP telephones experienced higher growth than that of revenue; IP telephone shipments increased by 17.9% from roughly 250,900 units in the fourth quarter of 2004 to around 297,500 units in the first quarter of 2005, while revenue for IP telephones only increased by 2.9% because of price erosion. This trend is expected to continue to impact unit prices and shipment numbers over the coming quarters.

"The trend of decreasing unit prices and increasing shipments can be related back to the fact that IP telephones with full functionality are only being deployed at those locations that make business sense, and that IP telephone hardware vendors currently discount hardware used in IP telephony implementations," said Rogier Mol, senior research analyst at IDC's European IP Telephony research service.

IP telephones are increasingly being deployed across multiple vertical market segments in the first quarter of 2005, for example in the pharmaceutical, automotive, and transport segments.

In terms of market share, 1Q05 was again a quarter of high growth for Cisco, and the company managed to maintain the highest market share in both revenue and unit shipments. In total, Cisco increased its shipment market share by 0.6% to 52%. Avaya finished second in the quarter, and increased its shipment market share by 0.9% to 12.6%.

IDC