Report: SMBs Driving Growth in European Business Telephony Market

The European business telephony market is experiencing solid growth, having shipped 21.4 million lines in 2007. A survey conducted by Frost & Sullivan (News - Alert) said the market may reach 22.1 million lines by 2013.

 

However, the market research company predicted 3.3 percent slowdown in the current year due to what it calls “modest decline in activity in the 1000+ extension market.”

 

 “Vendor consolidation is increasing buyer power,” said Frost & Sullivan analyst Dorota Oviedo, in a statement.

 

A significant portion of this market has already undertaken the migration to IP PBX (News - Alert).

 

In June, Frost & Sullivan said the market earned revenues of €1,277.3 million in 2007 and predicted the growth to reach €2,193.1 million by the end of 2013. The SMB segment is likely to be the primary growth driver over the long term with Cisco and Mitel (News - Alert) leading the vendors. The growth of the segment is indicated by the number of IP licenses.

 

As many businesses have migrated to IP PBX, having converged their network, they are increasingly taking action to expand IP deployments. This is impacting different categories such as IP desk phones, softphones, SIP phones and wireless IP phones.
 

“The focus in the European business telephony market has shifted to the sub 500 extension sector,” the report said. “Nearly 90 percent of new products released in 2007 targeted this segment. The SMB sector will fuel the overall market growth over long term.”

 

Despite the general optimism, challenges loom large, warns the researcher. In Europe, replacement cycle is past its peak activity, with markets set to slow down the growth. Besides, CAPEX constraints are dampening growth prospects. Unified communications (UC)-related product launches are also leading to a ‘wait and watch’ attitude amongst many enterprises, according to the report.

 

“Vendor consolidation has weakened supplier power,” Oviedo said. “Price declines are being noticed with major vendors recently announcing pricing changes to reflect a focus on software.”

 

Products are migrating from being hardware-based to increasingly software-oriented. Vendors are introducing appliance-based products to tackle the challenges of the SMB market. Due to high price sensitivity and lack of sophisticated IT management teams, the SMB segment demands simple systems.