According to a recent study titled European IP PBX Equipment Market -- Moving toward Converged Networks, conducted by New York City-based Frost & Sullivan, the Internet protocol private branch exchange market demonstrated strong growth last year, generating a total revenue of EUR 589.35 million. The study predicts the technology to continue expanding at a compound annual growth rate (CAGR) of 30.3 percent to reach EUR 1.78 billion in 2008.

Experts credit the technologys successful adoption to its lower cost. The adoption of IP PBX is largely being driven by its advantages such as cheaper inter-office and branch office connectivity and the resulting enhanced productivity, stated Shomik Banerjee, Telecom analyst for Frost & Sullivan.

The study names among the technology early adopters finance, government, retail, contact centers and medical entities. Analysts also believe that marketing efforts to promote the adoption of IP PBX technologies within these entities are rapidly steering away from major benefits with cost savings, and instead, focusing in productivity advantages. Future applications are likely to focus on business process productivity with unified communications being touted as the 'killer application' expected to drive adoption, noted the analysis.

The study found that the adoption of universal standards like session initiation protocol will eventually lead to the adoption of IP PBX solutions within the corporate world. The analysis forecasts IP-enabled PBX line shipments in Europe to likely increase to 2.34 million lines in 2008. The reason for this growth, the study says, lies in the short-term capital expenditure constraints of enterprises to migrate to converged solutions. Growth of IP-enabled line shipments is expected to be particularly high in 2004 and 2005 due to higher adoption in France and Germany. However, it is expected to reduce from 2006 onward due to the increased adoption of converged solutions and hosted IP telephony, the study revealed.

"Frost & Sullivan estimates that IP PBX line shipments alone accounted for EUR 411 million in Europe during 2003, which is likely to increase at a CAGR of 26.73 percent to EUR 1.34 billion in 2008," says Mr. Banerjee. "Legacy participants are aggressively promoting converged solutions through buy-back programs in an effort to hold their existing accounts."

European countries that have already expressed strong interest in IP telephony adoption within the enterprise include the United Kingdom and Scandinavia. According to the findings, among the most cautious countries to adopt the technology are Germany and France -- probably because of the huge investments made by Deutsche Telekom and their preference for a system of phased migration.

Johanne Torres is contributing editor for TMCnet.com and Internet Telephony magazine. Previously, she was assistant editor for EContent magazine in Connecticut. She can be reached by e-mail at [email protected]