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June 18, 2009

Cisco News - Cisco Hit by Q1 Carrier VoIP Contraction

By Michael Dinan, TMCnet Editor

The carrier VoIP market contracted by about 24 percent in the first quarter, meaning no vendor emerged unscathed, as they’re all posting revenue declines, a Redwood City, Calif.-based telecom market research firm today is reporting.

However, those vendors that have moved beyond North American markets appear to be faring better, officials at Dell’Oro Group say.
“According to the report, Alcatel-Lucent, Huawei and Nokia Siemens managed to gain share while Cisco (News - Alert), Nortel and Sonus were among the vendors whose share contracted on a quarter-over-quarter basis during the first three months of the year,” the firm reports.
The decline is the result of a perfect storm of capital spending reductions, seasonal weakness, the economic recession and falling fixed voice revenues.
Also, Dell’ (News - Alert)Oro says in its “Carrier IP Telephony Quarterly Report,” more and more subscribers are choosing wireless as their sole communications medium.
Even with those problems for the carrier VoIP market, there are some very strong sectors within IP telephony that are holding their own and even thriving, according to Greg Collins, the firm’s vice president.
“Business VoIP services, particularly SIP trunking, is an example,” Collins said. “Another example is the enterprise session border controller market that is seeing increased consolidation and investment as SIP trunking, combined with the need for businesses to integrate IP-PBX (News - Alert) systems from disparate vendors, creates an expanding market opportunity.”
The news comes even as VoIP penetration grows at a slower pace this year than it has in years past.
That slowdown appears to be coming from the residential side, however, as more and more businesses turn to the cost-saving technology for voice communications.
As TMC (News - Alert) Senior Web Editor Patrick Barnard reports, Infonetics Research’s (News - Alert) biannual VoIP and UC Services and Subscribers report finds that, despite the global recession, businesses continue to switch from traditional telephone service to IP Telephony.
“They’re being drawn to VoIP because of the cost savings and productivity enhancing features it brings,” Barnard reports. “The report defines VoIP services to include hosted VoIP (or IP Centrex), hosted UC (unified communications), integrated IP access, managed IP-PBXs, residential VoIP, SIP trunking and other types of IP voice access, including voice VPNs.”

Though business VoIP services represented only 31 percent of the total, this area grew faster than residential services during the year. Managed IP-PBX, hosted IP-PBX and hosted UC services accounted for three-fourths of the business VoIP total.

As Dell’Oro discovered, the Infonetics report highlights SIP trunking – declaring it the fastest growing segment of VoIP services. Diane Myers, directing analyst for service provider VoIP and IMS at Infonetics Research, predicts that SIP trunking will hit an 89 percent compound annual growth rate from 2008 to 2013 – this trend driven mainly by cost. She said that hosted UC services will take off as well, with worldwide revenue doubling between 2009 and 2013.

Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users.

Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan

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