Pure IP PBXs Up 10%, Overall PBX Market Down 12% in 1Q05, Dragged by TDM Systems

US

Infonetics: 1Q06 as the market continues to move towards IP voice technology and benefit from an improving economy. The number of PBX/KTS lines shipped worldwide decreased to 6.3 million in 1Q05, 15% lower than in 4Q04. Pure IP is the only PBX category to beat the budget blues in 1Q05, increasing 10% to $223 million, 36% higher than a year ago. Revenue is forecast to jump another 24% to $277 million in 1Q06. Pure IP and hybrid system revenue together total $1 billion. TDM system revenue sank 20% and hybrid system revenue dropped 13% in 1Q05. Hybrid system revenue, which accounts for the majority of worldwide PBX/KTS revenue, is expected to recover and increase 25% by 1Q06. The TDM segment, on the other hand, is expected to account for an increasingly smaller slice of the pie in the coming years. Most vendors recognize the shift in the market towards IP and have moved their products accordingly. The TDM segment, which still accounted for half the market at the end of 2003, is now less than a third. Most of the hybrid players had a down first quarter, but the pure IP players, like 3Com, Cisco, and ShoreTel, were able to maintain growth. This was pretty much a repeat of what happened a year ago; however, this dynamic, coupled with the progress that relative newcomers like Cisco have made over the past year, led to some interesting market shifts. For example, Cisco is now tied with Avaya for North American IP PBX market share, with both having 17% of lines and 23% of revenue in the first quarter—an impressive feat.

1Q05 Market Highlights

• The top IP PBX system vendors for lines shipped are Alcatel, Nortel, Avaya, Cisco, and Mitel

• 3Com had the highest sequential line shipment growth, up 26% in 1Q05

• Hybrid PBXs account for 57% of PBX/KTS revenue, TDM 28%, and pure IP 15%; by 2008, hybrids will increase their dominance to account for 67% of the market, pure IP will increase to 23%, and TDM will decrease to 9%.

Enterprise Telephony quarterly worldwide market share and forecast report Publ 20050602