IP telephony makes strides

Reports from two analyst firms indicate that IP telephony will make a serious challenge to traditional time division multiplexing (TDM) phone system sales over the next few years.

Revenue from IP PBX lines will outpace traditional PBX systems for the first time in 2003, according to a recent report by the research and consulting firm Allied Business Intelligence. Revenue for legacy PBX shipments is projected to hit US$3.2 billion in 2003, while IP PBX revenue is expected to be at $6.8 billion.

The report says enterprises buying new phone switches will opt for IP-based systems over circuit-switched PBXs. The report says that new IP PBX lines will go from 1.9 million in 2001 to 42 million by 2007.

Observers say a major factor holding enterprises back from adopting IP telephony is the installed base of PBXs that still have shelf life; companies with PBXs that are still functional or not fully depreciated will continue to use those systems, holding off on any moves to IP telephony for the next several years.

According to Allied Business Intelligence, the fear among businesses is that older PBX technology will not be as well supported by vendors down the road, and will eventually become obsolete.

Research from the Eastern Management Group supports this notion, as phone systems based on voice over IP were the only PBX systems that did not decrease in sales in the second quarter of this year. According to a recent report, sales of key telephone systems, PBXs and Centrex lines to U.S. businesses fell by 4 percent from the first quarter, while enterprise IP PBX systems increased slightly. However, Eastern Management Group estimates that IP PBX systems still make up only about 17 percent of all voice systems sold.

Cisco Systems Inc. was the top seller of IP phone systems in the second quarter, while Avaya Inc. was number one in the TDM voice market, according to Eastern Management Group.

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