Although IP telephony in the SMB market is still for early adopters, Mitel and Cisco led the way in U.S. market share of IP telephony station shipments in 2005.
Posted Mar 20, 2006
The SMB market for IP telephony experienced a 36 percent increase in station shipments in 2005, according to InfoTech's InfoTrack for Converged Communications (ICC). Meanwhile, shipments of traditional products that have served the needs of this segment, specifically key systems-described by Terry White, InfoTech vice president and ICC program director, as similar to small PBXs-dropped by 17 percent.
"In 2005 almost all of the key system manufacturers put more of an emphasis on product lines that support IP telephony," White says. "That happened in the PBX world maybe two or three years ago, where all of the big PBX manufacturers shifted their product marketing efforts around their IP telephony products and away from PBX. So, shipments of PBXs dropped immediately and that's what's happened now with the key system market."
Revenue generated from IP telephony systems and applications in the United States for the SMBs-defined by InfoTech as organizations with 500 employees or less-totaled $1.4 billion in 2005, but just 20 percent of that figure stems from applications, according to the report. The market for IP telephony systems and applications for SMBs is expected to grow at an average annual rate of 19 percent from 2005 to 2010, with total revenue surpassing $3 billion in 2010. By then, IP telephony-based apps are projected to represent 46 percent of total revenue.
"Some 60 percent of our survey respondents strongly agree that applications enabled by IP telephony will contribute significantly to business value," White said in a written statement. "But less than 10 percent say that is happening now. Many SMBs say they are waiting for early adopters to prove-in these applications." Others feel that most IP telephony vendors have not done an effective job of helping SMBs identify the applications that can deliver business value," White says.
Additional findings by InfoTech reveal that from 2005 to 2010, hosted IP-telephony services will account for roughly half of the sites that are implementing IP telephony, among businesses with fewer than 100 employees. Seventy-five percent of the small business sites most likely to use hosted IP telephony services are very small sites that do not use Centrex or key systems, according to the report.
Mitel topped the market share of IP telephony station shipments within the U.S. SMB market, with a 12.6 percent share in 2005. "Mitel traditionally has been a company that targeted the SMB market, so they have a large install base of small businesses that are looking to upgrade and go from their older generation Mitel products into IP telephony," White says. "And even though they're expanding into enterprise, they're out-executing other companies because they do have more of a focus on the SMB market than other IP competitors." Cisco Systems, 2004's fifth-place finisher, an enterprise standby that is making strides into smaller markets, secured the second slot with 11.7 percent market share in 2005.
For organizations that are considering IP telephony, White suggests that they evaluate the business value of such solutions. "When companies bought key systems or PBXs they only thought of them primarily as how they could serve their communications needs," he says. "Now with IP telephony, the applications can impact business processes and can be integrated with different business applications." White says vendors are talking about how their IP telephony systems can provide business value, but that the message gets lost when it comes down to individual customers. "Customers should be pressing their vendors as to what specific applications they have or their business partners have that would provide business value in their particular vertical market."
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