Service provider and enterprise IP telephony markets up in 2Q06; Cisco posts big gains in both

Market Wire, August, 2006

Two reports published by Infonetics Research show gains in both the service provider VoIP/IMS market and the enterprise telephony market in the second quarter of 2006.

According to "Service Provider Next Gen Voice and IMS Equipment," worldwide service provider next gen voice and IMS equipment revenue is expected to more than double between 2005 and 2009, from $2.5 billion to $5.8 billion. The market is up 6% to $772.3 million in the second quarter of 2006, following a 6% decline in the first quarter.

"It was a good quarter for carrier next gen voice, with all segments showing gains except session border controllers (SBCs), which were down a bit for the quarter, but up significantly year-over-year," said Stéphane Téral, principal analyst for service provider VoIP at Infonetics Research. "SBCs have become a strategic component of any next gen voice equipment offering these days, and they are reshuffling the vendor ecosystem. Many vendors will likely shift from a standalone to an integrated SBC architecture, including Cisco, Juniper, and AudioCodes due to its acquisition of Nuera and Netrake."

Infonetics' "Enterprise Telephony" report shows Cisco had a record quarter in the worldwide PBX/KTS market, which grew 3% sequentially to $2.2 billion (10% higher than a year ago).

"Vendor results in the PBX/KTS market were very mixed this quarter, with a net result of a small sequential gain," said Matthias Machowinski, directing analyst for enterprise telephony at Infonetics Research. "We expected Cisco to do well since it was the end of their fiscal year, but they blew right past our expectations, for the first time breaking 1 million lines per quarter. Nortel had a great quarter, too, while the other major players were more or less flat. As a consequence, worldwide market share positions were shuffled around this quarter, with Nortel shooting to the top for IP PBX line share (up from 3rd last quarter), and Cisco jumping from 5th to 2nd."

Carrier VoIP/IMS Market Highlights

--  Strong annual growth in the carrier next gen voice market continues to
    be driven by the trunk media gateway and softswitch segments, each of which
    will top $1.3 billion in 2006

--  The session border controller market is forecast to jump 84% between
    2005 and 2006

--  Revenue leaderboard: Cisco had a huge quarter for trunk media
    gateways, increasing 84% to take the lead spot from Sonus in 2Q06; Nortel
    leads in softswitches; Acme Packet leads in SBCs, Broadsoft leads in voice
    application servers

--  Worldwide residential and SOHO VoIP subscribers is forecast to nearly
    double between 2005 to 2006 to over 47 million subscribers
    

Enterprise Telephony Market Highlights

--    Pure IP PBX system revenue is up 36% in 2Q06, driven by strong results
      from Cisco

--    The hybrid IP PBX segment is down 1% in 2Q06, but annual growth will
      remain in the double digits through at least 2009

--    TDM system revenue decreased 1% in 2Q06, and will continue to decrease

--    IP phone shipments grew strongly in 2Q06, up 17% to 2.1 million, and
      strong growth is forecast through 2009 as VoIP deployments extend beyond
      the network core to the desktop

--    44% of worldwide PBX revenue comes from EMEA in 2Q06, 33% from North
      America, 17% from Asia Pacific, and 6% from CALA

Download sample data at www.info.infonetics.com . For sales, contact Larry Howard, vice president, at larry@infonetics.com or 1 (408) 583-3335.

Infonetics Research ( www.infonetics.com ) is the premier international market research and consulting firm specializing in data networking and telecom. Services include market share and forecasting, end-user survey research, service provider survey research, and service provider capex analysis.

Press Contacts: Stéphane Téral Principal Analyst, SP VoIP, IMS & FMC Infonetics Research (408) 583-3371 Email Contact Matthias Machowinski Directing Analyst, Enterprise Voice & Data Infonetics Research (781) 933-9868 Email Contact