Telephony Market Recovering After Recession, Report Finds

 
 
By Nathan Eddy  |  Posted 2010-07-02 Email Print this article Print
 
 
 
 
 
 
 

A Frost & Sullivan report finds while the recession rocked the telephony industry, mergers and aggressive customer programs have resulted in a strong recovery.

The world enterprise telephony platform and endpoint market is estimated to have shipped 37.3 million enterprise telephony lines, 12.6 million units of Internet protocol (IP) desktop phones, and 12 million IP desktop communication clients in 2009, according to a report from research firm Frost & Sullivan. The report noted that although 2009 was a "very challenging year," it was also characterized by what the firm termed "landmark events" that company analysts predicted would have a long-term effect on both technology evolution and competitive dynamics.

However, the 2009 economic turmoil caused the sales of almost all major enterprise telephony vendors to decline at double-digit rates, the report found, and also speeded the collapse of the former telecommunications giant Nortel Networks. Despite market challenges, the report found the overall market earned revenues of $7.77 billion in 2009. "The fall of Nortel signaled the end of an era and set alarm bells ringing for telephony providers," said Frost & Sullivan industry analyst Alaa Saayed. "It was clear that change was imminent, and that new entrants and more dynamic business models would question the viability of established paradigms."

Saayed said although the effect of the recession is expected to linger for another 12 to 18 months, 2010 promises to be better than 2009 in terms of world demand for telephony solutions. The report predicted IT and communications spending will pick up steam in 2010 for North America  and in 2011 and 2012 in Europe. Asia Pacific, Central America, and Latin America are predicted to have smoother transitions, with growth expected in the coming years.

The report warns the time division multiplexing (TDM) market will experience a downslide, though IP shipments will resume their growth trajectory, triggered by the improvement of macro-economic conditions and the need to replace outdated systems. Company analysts predicted in the future, technological developments, such as softswitch systems, virtualization, and unified communications (UC), would drive equipment upgrades.

Innovation and continued investment in technology development would help circumvent the impediments thrown up by the recession, the report noted, and further stated that important actions taken to offset the negative impact of the economic downturn included major acquisitions and reorganizations, such as the mergers of HP and 3Com, and Avaya and Nortel Networks. The introduction of new flexible IP telephony solutions, the implementation of "very aggressive" customer programs, and an increased focus on channel expansion strategies were also instrumental to the industry's turnaround, the report said.

"To ensure business progression in this scenario, participants must gradually shift resources from hardware to software (for both systems and endpoints), target the underserved small to medium-size business (SMB) market with appealing solutions, tap into new global markets, and strive for interoperability as well as openness," Saayed said. 

 
 
 
 
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
 
 
 
 
 
 
 

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