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World Enterprise Telephony Markets
Frost & Sullivan, June 2008, Pages: 146
Infrastructure Refresh to Promote Market Expansion
OPEX reduction through network and skill convergence across voice and data infrastructure is driving growth of world enterprise IP telephony markets. With these benefits in mind, greenfield sites are leapfrogging to IP systems. However, replacement cycles remain the single most dominant trigger for new deployment in the installed base. 'Replacement continues to be the main driver for IP telephony adoption,' notes the analyst of this research. 'Approximately 71.7 percent of all lines shipped worldwide in 2007 were IP-capable.' Over the long term, the small and medium business (SMB) segment will adopt IP telephony creating significant penetration and growth opportunities across the world.
The world enterprise telephony systems market is estimated to have generated $8.37 billion in 2007. Overall, the market growth rate is estimated at 6.8 per cent y-o-y globally. Central America/Latin America (CALA) remains the fastest growing region, followed by Asia Pacific (APAC). Both these markets have strong replacement activity in addition to greenfield deployments arising out of broad-based economic growth. The European, Middle Eastern and African (EMEA) markets and the North American (NA) markets are relatively mature and replacement is the key driver. North America had the lowest growth, estimated at 3.1 percent y-o-y by shipments. EMEA remained the largest market, accounting for 44.7 per cent of the global market by shipments. IP revenues exceeded TDM revenues for the first time in APAC in 2007.
IP adoption continues to grow worldwide. The percent of traditional system shipment in the total market declined from 33.3 per cent in 2006 to 28.3 per cent in 2007. CALA leads in IP system growth rate followed by APAC. The market for traditional systems continued to decline. However, its decline has been considerably slow in APAC (-3.1 per cent), CALA (-2.3 per cent), and EMEA (-2.3 per cent) by shipment. Globally, however, this segment declined by 9.0 per cent, with North America reporting significant declines. In 2007, several new products were announced, approximately 90 percent of which addressed the SMB market (30 to 250 users). Frost & Sullivan expects an increased rate of activity in this segment in 2008.
Market Undergoing Consolidation Phase
The industry is in the phase of consolidation. Leading examples of this trend include Mitel’s acquisition of Inter-Tel, NEC’s acquisition of Sphere Communications and Silverlake and TPG Capital’s acquisition of Avaya, among others. The market concentration of the top three participants is rising. It increased from 34.4 per cent in 2006 to 36.0 per cent in 2007. The composition of the leaders is changing. Avaya and Cisco have been constantly gaining market share from Alcatel-Lucent, NEC, Nortel and Siemens Enterprise Communications.
New participants are gaining traction. Avaya was the market leader by revenue, while Nortel led by shipment. NEC led the TDM market. In the IP system market, Avaya led by revenue, while Cisco was the market leader by shipment. Avaya and Cisco are market leaders in APAC (along with NEC) and NA; Alcatel-Lucent and Siemens lead the market in CALA and EMEA.
'Vendor consolidation might affect market confidence,' cautions the analyst. 'A weakening supplier position will boost buyers’ power, even as strong indications emerge of a price decline.' Vendors are migrating from hardware to software models to preserve margins. They are increasingly relying on off-the-shelf components and standards-based hardware platforms to remain competitive.
This Frost & Sullivan research service titled World Enterprise Telephony Markets provides an in-depth analysis of business telephony endpoints. In this research, Frost & Sullivan's expert analysts thoroughly examine market drivers, restraints, challenges and trends. Further, the study offers unit shipment and revenue forecasts along with market share estimates for select vendors.
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