It's been about eight months now since the communications industry started
suffering from a loss of investor confidence -- stocks have plummeted, VC money
has dried up, and now the market has a major case of the jitters as
belt-tightening measures start to take their toll.
Depending on what article you read or who you talk to, we're either heading
into a recession, or we're entering a period of slower but steady growth.
Uncertainty about the future is running rampant. This psychological condition is
certainly putting a major damper on the economy.
Amidst all this sturm and drang, many new and emerging communications
companies are finding the financial climate increasingly hostile, no thanks to
the current state of the communications industry bellwethers. Carriers like
AT&T, Worldcom, and Qwest are putting the brakes on new equipment spending,
which is starting to have a serious impact on the health of leading technology
vendors. Recently, Nortel Networks, Cisco Systems and JDS Uniphase all hit new
52-week lows on the heels of this spreading slowdown.
Thankfully, all is not lost -- not by a long shot. While sales of big-ticket
telecom switches and other network gear are taking big hits as buyers adopt more
"prudent" spending plans, the opportunities for technology that
promises to help carriers create and deploy new services in a cost-effective
manner are still enormous. Softswitches, IP telephony gateways and gatekeepers,
and other cost-saving, service-enabling technologies stand to gain from this
shift in spending. One key factor supports this vision: The market is no longer
waiting patiently for payback on the infrastructure build-out that's occurred
over the last several years. The sooner service providers can deploy new
services to "fill the pipes," the sooner new sources of revenues will
Following the same logic, enterprise IP telephony solutions also stand to
benefit from more cost-conscious spending. A recent study from The Phillips
Group InfoTech (www.phillips-infotech.com) on the IP LAN telephony market is
bearing this out. The study is showing faster than expected growth as U.S.
companies begin to convert their corporate phone systems from the traditional
PBX model to one based on IP telephony. According to the study, IP LAN
Telephony: Market Demand and Implementation Strategies, 17 percent of U.S.
business began the implementation of IP LAN telephony in 2000, which is 30
percent more than previously anticipated. Furthermore, the study predicts that
within four years, the percentage of enterprises that are likely to adopt this
new technology will increase to more than 80 percent.
Cost savings and remote networking headed the list of reasons why businesses
plan to purchase IP LAN telephony systems. Among the 500 enterprise and small
business decision-makers polled in the study, most believed that one system that
can handle both voice and data will cost less than separate systems. Even more
attractive is the fact that a single IP LAN telephony system can handle the
communications requirements of multiple sites.
Also telling were the supplier preferences the study uncovered -- the study
revealed that enterprise decision-makers were split regarding their supplier
preferences for these integrated voice and data systems. 37 percent indicated a
strong preference for their traditional PBX vendor, while 26 percent preferred
their current data network supplier or value-added reseller (VAR). More than a
third of these enterprises, however, would rather work with a new supplier.
Revenue-wise, the study pegs the market for IP LAN telephony systems at $138
million in U.S. sales in 2000, and projects sales for these next-generation
systems to exceed $3.2 billion by 2005. Not surprisingly, this tremendous growth
opportunity is attracting the attention of a wide range of equipment makers. The
leading data networking equipment vendors are moving aggressively into this new
market. Based upon The Phillips Group InfoTech's analysis of market share for
the first nine months of 2000, 3Com and Cisco Systems were the leaders in this
emerging market segment. Avaya Communication, Nortel Networks, Siemens, and
Alcatel -- companies who are the leading manufacturers of traditional PBXs --
have all introduced robust IP LAN telephony product lines during the past year
to combat this competitive threat.
To The April 2001 Table Of Contents ]
TMC's ConvergeNET, the industry's largest and longest-running IP telephony
interoperability showcase, is a fixture at our Internet Telephony Conference and
EXPO events. Lesser known but still vitally important are the interoperability
efforts undertaken by vendors exhibiting their equipment at TMC's Communications
Solutions EXPO. At the last Communications Solutions EXPO in Las Vegas
(December 2000), AG Communications Systems successfully demonstrated
interoperability between their iMerge Centrex Feature Gateway and four vendors'
CPE products in a live, real-world setting. In part due to this activity, the
editors of TMC awarded the iMerge CFG with "Best of Show" honors at
this event. For those of you who missed the action in Vegas, AG will once again
conduct interoperability demonstrations at the upcoming Communications Solutions
EXPO Spring, coming to the Washington, D.C. Convention Center, May 23-25,
To The April 2001 Table Of Contents ]