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September 30, 2011

Industry Consolidation Could Prove Beneficial for Small Business VoIP

 By Susan J. Campbell, TMCnet Contributing Editor
Mergers and acquisitions in the telecommunications space are not a new phenomenon, but some of the resulting technology combinations can cause a stir throughout the industry. 8x8 purchasing Contactual (News - Alert), Transcend United merging with LiquidSmoke and West Corp. acquiring Smoothstone have all turned heads, but also shine a light on the growth of small business VoIP.

This recent Fierce Telecom (News - Alert) piece
dove into the SMB VoIP trend, highlighting that the cornerstone in the VoIP marketing message is the ability to launch and manage a business phone system at a significantly reduced cost over traditional, on-premise PBX (News - Alert). With the growth in SMB VoIP, it simply makes sense for VoIP providers to add managed contact center capability to their portfolio.

This convergence of service offerings is also aimed at providing Unified Communications (News - Alert) (UC) solutions to the industry. The question that we may need to answer, however, is if SMB-focused VoIP providers can truly balance a strategy based on growth-through-acquisition with a clear target on the budget-conscious SMB, while still remaining profitable.  

There is a definite benefit to consolidation for IP-based providers seeking to extend services out for SMB VoIP. The trend has picked up more steam in 2011 as companies continue to gain market share and can easily pick up other providers offering components they need, such as hosted contact centers.

Smoothstone views itself in the same tier as companies like AT&T (News - Alert) and equipment providers such as Avaya and Cisco and sought to extend out its offerings by courting West Corp. The company recognized that to effectively compete for SMB VoIP business and enterprise share, a strong partner was needed.

A focus on company consolidation will help to keep prices competitive for the SMB VoIP space. As VoIP continues to grow, however, it’s likely that a number of the cheap or free offerings in the market will cease to exist as companies intensify their focus on SMB VoIP to drive strong revenues.

At the same time, it will be interesting to watch the SMB VoIP market as larger VoIP providers continue to acquire smaller companies in an effort to expand out their service portfolios. The promised market competitiveness could begin to impact traditional carriers, putting more pressure on them to cater more readily to the SMB VoIP market.

The true winners will be the small businesses seeking SMB VoIP services as the increase in competitive offerings will only lend to innovation, better pricing and ultimately better service.

Susan J. Campbell is a contributing editor for TMCnet and has also written for To read more of Susan’s articles, please visit her columnist page.

Edited by Stefanie Mosca

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