VoIP Adoption Soaring -- But Not Revenues
If consumer Voice-over-IP (VoIP) is surging
why are VoIP equipment revenues -- especially in a market segment that includes
gargantuan players such as Cisco Systems Inc. and Alcatel-Lucent -- softening?
It depends on how you look at it, market watchers say.
First, if there's any softening, it's happening in the service provider segment.
Second, service providers are still buying more VoIP gear than ever before (on
a year-over-year basis). It's just that the VoIP equipment segment's second
quarter performance fell off a bit from the torrid pace it set in Q1.
According to market watcher Infonetics, the worldwide VoIP market was down
by 4 percent, thanks largely to a double-digit decline in the session border
controller (SBC) and softswitch segments. That's the first-ever sequential decline
for SBC, which dropped 14 percent between Q1 and Q2 of 2008.
If there's any softening, however, it's quarter-to-quarter, not year-over-year.
Compared to 2007, the overall VoIP market is up by 3 percent -- spurred by strong
gains in the media server and (surprise!) SBC segments.
For the rest of 2008, Infonetics projects, the VoIP should post strong growth.
"While down in the first half of 2008, we expect the carrier VoIP equipment
market to bounce back in the second half, ending the year on a positive note.
The five-year outlook looks good as well, as demand for VoIP networking gear
continues unabated, driven by a long term migration from circuit switched to
packet telephony," said Stéphane Téral, principal analyst for
VoIP and IMS at Infonetics Research, in a statement. "Similarly, while the session
border controller segment saw its first sequential decline this quarter -- due
to a pause in deployments in North America and Europe where large service providers
are maxing out their installed base rather than purchasing new equipment --
we expect it to pick up nicely in the second half of the year,"
In fact, Infonetics projects robust VoIP market growth through 2011, with the
combined VoIP and IMS segments nearly doubling in revenues over the next four
years. During that period, Infonetics says, IMS core equipment -- particularly
for home subscriber servers (or HSS) and call session control function (CSCF)
servers -- should account for most of that growth.
During the quarter just past, Alcatel-Lucent -- which seems to be hitting
its post-merger stride -- rocketed up the charts, posting 173 percent sequential
growth in DS0 shipments and landing in the No. 3 spot for DS0s and revenue.
Cisco, for its part, has had mixed results in the VoIP service provider segment.
According to a recent
survey of service provider customers, for example, Cisco ranks as one of
the top five VoIP vendors in the industry, alongside rival Alcatel-Lucent and
VoIP specialists Acme Packet and Sonus. Cisco was tops, overall, in terms of
brand recognition, but trailed other players in the technology, product roadmap,
security, management and price-to-performance categories.
Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.