A Good News Story

Many categories in the technology sector, and the economy at large, have stalled or lost ground during the past few years as customers have pulled back on spending, and buying trends have shifted. But when you look at trends for the past decade, VoIP has made big gains. And it looks well-positioned for the year ahead and beyond.

An IBISWorld Inc. report issued late last year indicates VoIP was the fastest growing technology of the past decade. According to the study, the VoIP industry has grown 179035 percent since 2000. (Further down the list is search engines, with 1656 percent growth; e-commerce and online auctions, with 469 percent growth; online dating and matchmaking, with 249 percent growth; and, jumping down to the No. 8 position, wireless telecommunications carriers, with 183 percent growth.)

More recently, IBISWorld analyzed more than 700 industries to identify the winning sectors in the coming year. It selected telecommunications as among the likely winners, noting the industry’s resiliency despite last year’s recession. According to this report, VoIP provider revenue is expected to rise again in 2010, to the tune of 17.9 percent.

Recent headlines seem to support this VoIP good-news story.

For example, 8x8 Inc. recently was named one of the fastest growing companies in North America on Technology Fast 500, Deloitte (News - Alert) LLP's ranking of 500 of the fastest growing technology, media, telecommunications, life sciences and clean technology companies. Rankings are based on percentage of fiscal year revenue growth during the five-year period from 2004 to 2008. 8x8 (News - Alert), which provides more than 18,000 business customers with a money-saving alternative to traditional landline solutions, grew by 562 percent during this period.

We’ve also seen strong performance of late from several VoIP-related companies on the equipment and software side.

Metaswitch Networks in early October reported its annual results for the 2008/2009 financial year to Aug. 31. Overall revenue grew 4.2 percent from £59.3 million to £61.8 million ($113.7 million), with operating margins sustained above 20 percent. The company also has remained profitable. That was during the recession and amid a market in which carrier VoIP spending was down by more than 30 percent, the company points out.

Meanwhile, session border controller vendor Acme Packet (News - Alert) saw business pick up in October 2008, actually corresponding with the financial crisis. That’s because, as TMC’s Rich Tehrani noted in a past Publisher’s Outlook piece, after the financial meltdown of world economies, job security at companies became tied to accomplishing goals better, faster and cheaper, and IP technologies like those from Acme Packet helped accomplish those goals.

Empirix (News - Alert), which is in the VoIP testing space, is yet another company that has achieved significant growth over the past year.

And while Infonetics Research (News - Alert) expects a 30 percent drop from 2008 in worldwide revenue for 2009 service provider next-generation voice equipment overall, that’s the past. Most industry watchers expect technology spending to pick up in 2010 as many of the companies that had delayed investments in the darkest days of the economic meltdown are now in need of new solutions and are starting to feel more comfortable that a recovery has begun. And IP-based solutions, including VoIP and unified communications, are ready to meet that need. IT

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