Service provider and enterprise IP telephony markets up in 2Q06; Cisco posts big gains in both

Infonetics: Research show gains in both the service provider VoIP/IMS market and the enterprise telephony market in the second quarter of 2006.

worldwide service provider next gen voice and IMS equipment revenue is expected to more than double between 2005 and 2009, from $2.5 billion to $5.8 billion. The market is up 6% to $772.3 million in the second quarter of 2006, following a 6% decline in the first quarter.

It was a good quarter for carrier next gen voice, with all segments showing gains except session border controllers (SBCs), which were down a bit for the quarter, but up significantly year-over-yea SBCs have become a strategic component of any next gen voice equipment offering these days, and they are reshuffling the vendor ecosystem. Many vendors will likely shift from a standalone to an integrated SBC architecture, including Cisco, Juniper, and AudioCodes due to its acquisition of Nuera and Netrake.

Cisco had a record quarter in the worldwide PBX/KTS market, which grew 3% sequentially to $2.2 billion (10% higher than a year ago).

Vendor results in the PBX/KTS market were very mixed this quarter, with a net result of a small sequential gain. We expected Cisco to do well since it was the end of their fiscal year, but they blew right past our expectations, for the first time breaking 1 million lines per quarter. Nortel had a great quarter, too, while the other major players were more or less flat. As a consequence, worldwide market share positions were shuffled around this quarter, with Nortel shooting to the top for IP PBX line share (up from 3rd last quarter), and Cisco jumping from 5th to 2nd.

Carrier VoIP/IMS Market Highlights

• Strong annual growth in the carrier next gen voice market continues to be driven by the trunk media gateway and softswitch segments, each of which will top $1.3 billion in 2006

• The session border controller market is forecast to jump 84% between 2005 and 2006

• Revenue leaderboard: Cisco had a huge quarter for trunk media gateways, increasing 84% to take the lead spot from Sonus in 2Q06; Nortel leads in softswitches; Acme Packet leads in SBCs, Broadsoft leads in voice application servers

• worldwide residential and SOHO VoIP subscribers is forecast to nearly double between 2005 to 2006 to over 47 million subscribers

Enterprise Telephony Market Highlights

• Pure IP PBX system revenue is up 36% in 2Q06, driven by strong results from Cisco

• The hybrid IP PBX segment is down 1% in 2Q06, but annual growth will remain in the double digits through at least 2009

• TDM system revenue decreased 1% in 2Q06, and will continue to decrease

• IP phone shipments grew strongly in 2Q06, up 17% to 2.1 million, and strong growth is forecast through 2009 as VoIP deployments extend beyond the network core to the desktop

• 44% of worldwide PBX revenue comes from EMEA in 2Q06, 33% from North America, 17% from Asia Pacific, and 6% from CALA

Enterprise Telephony Publ 20060830