Worldwide IP PBX Revenue Up 23%, TDM Systems Down 15% in 2005

Infonetics: The enterprise telephony market continues its steady transition from circuit switching technology to packet switching technology, with worldwide TDM system revenue falling 15% and IP PBX revenue rising 23% between 2004 to 2005. Together, worldwide TDM and IP PBX systems revenue totaled $8.1 billion in 2005, a 12% increase over 2004, and will grow 43% between 2005 and 2009, when it will reach $11.6 billion as organizations continue to move to VoIP. In that five-year span, IP PBX revenue is forecast to jump up 82% while TDM revenue will plunge 88%.

For the quarter, PBX/KTS revenue totaled $2.2 billion in 4Q05, up 1% over 3Q05, and 10% higher than a year ago. TDM system revenue was down 6% in 4Q05, and IP PBX revenue nudged 3% higher than last quarter.

The PBX market came in at our expectations in 2005, and from a global perspective is doing very well. worldwide revenue growth accelerated in 2005, although it's mostly coming from EMEA, Asia Pacific, and CALA. North America lost revenue share in 2005 as things slowed down here, showing just 4% revenue growth for the year.

• In the overall PBX/KTS systems market, Nortel, Avaya, Siemens, Alcatel, and NEC (in that order) lead in worldwide 2005 line shipments

• Nortel leads the North American IP PBX market in line shipments for 2005, followed by Avaya and Cisco, but it's a very close race among all three

• Alcatel leads the IP PBX market in EMEA in 4Q05 and for the year, followed by Siemens

• Cisco dominates the market for IP phones with 42% unit market share in 2005

• Hybrid PBXs accounted for 65% of 2005 PBX/KTS revenue, TDM 23%, and pure IP 12%; hybrids and pure IP will continue to increase through 2009 at the expense of TDM

• 44% of 2005 PBX/KTS systems revenue came from EMEA, 32% from North America, 19% Asia Pacific, and 5% CALA

Enterprise Telephony Publ 20060228