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December 14, 2010

VoIP Equipment Market on the Upswing

By Susan J. Campbell, TMCnet Contributing Editor


The VoIP equipment market is an interesting one today, given the accelerated growth of this communications platform over the past few years. To get an inside view of this market segment, Erik Linask, TMC Group Editorial Director, recently interviewed Garrett Smith (News - Alert), director of marketing and business development at VoIP Supply. 


Smith highlighted that overall, the VoIP equipment market is on the upswing after the lull of the recession. As for purchasing patterns between larger and smaller companies, Smith noted that the biggest difference is that larger businesses tend to buy in a much more formal and structured manner. As for IP migration, Smith said that it depends on the size of the company. He also noted that the number of do-it-yourself customers in the market is definitely decreasing. The majority of buyers today have only a vague understanding of VoIP and most don’t want to bother with buying, building and maintaining. 

When asked about the impact of cloud communications on VoIP hardware suppliers, Smith said he believes it has forced them to rethink how their products are configured and managed. As for HD, Smith believes it is hampered by the fact that it is not use widely enough for most to gain any benefit from it. In terms of growth in the open source telephony market, Smith highlighted that it has shifted from the do-it-yourself business building phones systems to carriers and developers utilizing platforms. As for FoIP, Smith believes it may be overhyped by fax vendors, despite the current need for a number of businesses, and when it comes to mobile VoIP, the future is now. 

See below for the entire interview:

On a broad level, what does the VoIP equipment market look like today? 

Overall the VoIP equipment market is on the up-swing after a post-recession lull. The rate of new and innovative products has slowed dramatically, but the VoIP equipment that is being introduced today is significantly easier to use and more “future proof” than predecessors. The biggest trends coming from the VoIP equipment market are wideband voice codec support, mobility (DECT (News - Alert)) and video (multimedia).

How do purchasing patterns differ between larger and smaller businesses?

It depends on the scope of the purchase, but the biggest difference in purchasing patterns is that larger businesses tend to buy in a much more formal and structure manner. They’ve already done preliminary research, have a solid understanding of their needs and available solutions. They often have formal RFP or bidding process. They’ve already received budget approval and really are focused on “who’s the right solution provider” for my needs. For them, the purchase is as much about getting what they need as price. Smaller businesses on the other hand tend to purchase in a more informal and spontaneous manner. They’re usually less educated, require more hand-holding and often do not have a set budget. Small businesses do tend to value service/support over price, though they are still price sensitive.

What approach are companies taking toward their IP migration (e.g., wholesale replacement or incremental)?

It depends on the size of the company. Larger companies typically migrate to IP in an incremental fashion due to size and complexity. Most smaller businesses can get away with a wholesale replacement. We typically advise customers to make an incremental switch, so as to not shock users or other internal systems, but many still choose to do a wholesale replacement.

Are customers looking for product only, or for support and technical services, as well?

The number of do-it-yourself customers is definitely decreasing. Today the majority of buyers have only a vague understanding of VoIP. They are not “into” the technology such that they want to bother with buying, building and maintaining. So there is an increasing demand for services and support. That’s why we recently released Deploy, our nationwide installation services. Through Deploy businesses can have someone come out and take a look at their situation, receive a number of possible solutions, then have their system fully configured and installed.  It takes all the pain out of migrating to VoIP.  

What impact is the increased movement to cloud communications having on VoIP hardware suppliers?

I think it has forced them to rethink how their products are configured and managed. With cloud communications coming into favor with businesses, VoIP hardware suppliers have had to work hard to ensure that their products are easy to configure, manage and troubleshoot remotely. I also think that the increased use of cloud communications has some premised based VoIP system suppliers worried, but we haven’t seen hosted type services capture much market share or interest with business of more than 15 people.

We keep hearing that HD is coming. What interest are you seeing in HD voice?

 HD voice is definitely a popular topic, but HD voice is hampered by the fact that it is not used widely enough for most to gain any benefit from it. For instance all of our internal calls at VoIP Supply are in HD, but the majority of calls to and with the outside world are in regular definition. It makes it tough a tough sell in some cases, because HD voice is something you really have to hear to understand. This is a hurdle that will only be removed with time, but we do advise customers to prepare for the future and if budget allows purchase a handset or endpoint that is HD capable.

What kind of growth are you seeing in the open source telephony market?  What’s driving the growth?

The open source telephony market is interesting. The growth in this market has shifted from do-it-yourself businesses building phone systems to carriers and developers utilizing the platforms to deliver a multitude of communications services. This has resulted in a decrease in end user interest in open source telephony components, but an increased demand for packaged “open source based” solutions. Overall customers love the flexibility and cost benefits that open source provides them. I don’t see this changing anytime soon.

Fax vendors argue that FoIP is a “must have” when it comes to a complete unified communications solution. Is that true?

Of course they do. That’s their business. The reality is that fax is a dying form of document transfer and management, but there are still many businesses that are heavily dependent upon fax. For them Fax over IP is a must, but its cost versus reliability factor leaves most businesses who are not dependent upon fax opting to simply scan and email.

Does mobile VoIP have a future?  If so, how soon?

I’d say the future is now for mobile VoIP. Companies like fring, Nimbuzz and Truphone (News - Alert) have acquired massive amounts of users in the last few years. As smartphones continue to become more pervasive and wireless data infrastructure improves to better handle the stress placed upon them by increased traffic, there is no doubt in my mind that mobile VoIP providers will account for a significant portion of the overall VoIP market. This makes the future superstar fixed mobile convergence (FMC).


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 Tammy Wolf




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