Dell'Oro: IP phone switches seizing market share

Phone systems based on IP (Internet Protocol) have been calling enterprises for several years now, and many IT and telecommunications managers are now answering, according to market research company Dell'Oro Group.

More mature products and support for existing phones are helping IP PBXes (private branch exchanges) move into the mainstream, said Dell'Oro analyst Steve Raab, who wrote a report on the topic issued Wednesday.

Worldwide shipments of IP PBX gear, measured in phone lines, soared 86 percent in the first quarter of 2004 from a year earlier, and jumped 13 percent from the previous quarter, Dell'Oro reported. Meanwhile, line shipments of traditional PBXes fell 9 percent from the previous quarter, the Redwood City, California, company said.

IP PBXes are servers that treat voice calls as data traffic and use software to provide corporate calling features such as extensions, hold functions and voice mail. They allow enterprises to consolidate their PBX functions in one location, cutting deployment management costs, and help pave a path toward multimodal communications involving voice, text and video, Raab said.

Alcatel SA, the biggest vendor of the new PBXes, saw its line shipments rise 4 percent from the last quarter of 2003, while competitors registered even bigger gains. Number two Avaya Inc. had a sales boost of 29 percent and for the first time shipped more IP PBXes than traditional boxes, Raab said. Nortel Networks Corp., the third biggest seller, marked an 8 percent gain, and Cisco Systems Inc., in fourth place, saw line shipments grow 35 percent in the quarter.

North American enterprises were first off the mark in widely adopting IP PBXes, but European companies have now embraced the technology as well and the Asia-Pacific region is starting to pick it up, Raab said.

IT executives no longer consider the technology a niche product that they can ignore, Raab said. Helping to move it into the mainstream are traditional vendors who now let customers reuse old PBX modules and desk phones rather than making a hard shift over to IP, he said.

"More and more customers are believing it's a question of, 'When do I make the migration?'" Raab said.

Using a single central IP PBX, a company can give branch office and home workers the same extension and same calling features they would have if working at headquarters. With traditional PBXes, they have to set up separate boxes at every branch and integrate those, he said.

"Managing ten small branches and one large switch, and networking and keeping them coordinated, is a lot more configuration and management work than simply having one large system," Raab said.

In addition, IP systems offer a range of new options, including unified messaging, Wi-Fi mobile phones, easy setup of conference calls and smooth shifts from text messaging to voice calls. Eventually, video will come on to the same common network as well, he added.

Putting voice on the data network is even likely to change companies' service provider relationships, Raab said. Most IP PBXes are still hooked up to the same T-1 (1.5M bit-per-second) lines that went in to the old PBXes, though in some cases companies could replace those with high-speed data services that support voice, he said. Enterprises may be finding it more trouble than it's worth today to scope out competitive carriers' offerings and the costs involved, but in time, more will make that shift to save money, Raab said.

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