TMCnews Featured Article
December 07, 2011
The Push for SMB VoIP Could Shift Cisco's Revenue Stream
By Susan J. Campbell, TMCnet Contributing Editor
In an effort to tap into the small- to medium-sized business (SMB) unified communications market, Cisco (News 
- Alert) announced simplifications and cost reductions to its Voice over Internet Protocol (VoIP) offering. This will be a large push for more SMB VoIP services and improving unified communications systems.
According to this Forbes report, this change will gives SMBs an opportunity to use enterprise grade IP phone systems that use integrated collaboration tools, without draining IT and financial resources. Meanwhile, the switch gives Cisco a head start on the competition including Juniper and Alcatel-Lucent (News - Alert). At 15 percent above the current market price, Cisco is estimated to have a $20.99 Trefis price. Note that earnings reports have not yet been released.
The SMB VoIP services market could see as much as $76 billion in revenues by the year 2015. As for mobile VoIP solutions, those numbers are expected to increase from 47 million in 2010 to nearly 410 million in three years. The number of seats for hosted SMB VoIP and unified communications services could even double during that time, as well.
This SMB VoIP mid market can offer untapped potential. Most of the current VoIP service revenues are dominated by residential customers, but Cisco believes the SMB segment could take off. Many of those particular SMBs forge ahead with outdated branch exchange systems and old telephony applications.
Using these systems, despite their inability to meet today’s business needs, lack of scalability and exorbitant expenses, companies hold on to them like a security blanket. Cisco is hoping that pushing SMB VoIP services will allow those same SMBs to understand SMB VoIP usage and the benefits it offers, specifically to this segment of the market.
Many of the available SMB VoIP solutions with Cisco are being offered for just $100 per user for a 100-person organization. This low cost includes the functions necessary to take those small businesses and give them the capabilities of their much larger counterparts. With these changes, the global shipping of IP phones could potentially jump from 20 million this year to nearly 30 million in 2015. This increase would easily change the predicted $20.88 Trefis prices.
Given the proven benefits offered with SMB VoIP, Cisco and other players in this space can effectively create momentum and drive additional opportunities, benefitting those small businesses seeking to exploit next generation technologies.
Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.
Edited by Jamie Epstein
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