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PHILLIPS STUDY SAYS: CPE MARKETS FLATTEN: End Users Hold Off On New System Purchases Due To Uncertainty Regarding The Impact Of Ip Telephony May 23, 2000 - CPE Marketplace PARSIPPANY, NJ, May 23, 2000 - The corporate phone system market boom of the past five years appears to have been derailed by uncertainty generated by looming technological change according to a report from PBI Media (www.thephillipsgroup.net), a global research and consulting firm focused on the high-growth telecom and IT industries. "It would appear that the period of rapid growth of the past several years in the enterprise voice communications market has drawn to a close," said Frank Stinson, senior product manager at PBI Media. While shipments of Private Branch Exchange (PBX) systems increased a robust 15.6 percent during the first half of 1999, they actually declined 1.1 percent in the second half of the year. The Key Telephone System (KTS) market also flattened considerably in the second half of 1999, with shipments down 0.4 percent from the same period in 1998. These figures mark a dramatic departure from the consistent double-digit growth of the previous five years. According to the report, the 5-year market surge was driven by high corporate profits, a low cost of capital, and aggressive vendor pricing and packaging. Y2K compliance also had a major impact on the replacement of legacy systems and applications. "End users appear to be taking a wait and see attitude to evaluate the viability of IP Telephony, after making substantial Y2K upgrades over the past couple of years" said Stinson. "They are concerned that current IP-PBX systems may not yet deliver the features, scalability, and reliability they have come to expect in traditional PBXs. At the same time, they are reluctant to make a large investment in a traditional PBX that may not provide the functionality that they need a few years from now." For these reasons, PBI Media Study projects a significant slow down in the PBX and Key/Hybrid markets during the 2000-2002 period. The pace at which IP Telephony develops from both a technological and end user acceptance standpoint is the largest variable in this outlook, he explained. Adjuncts, such as gateways, and upgrades, including IP trunk and line cards, will likely begin to ship in significant numbers over the next few years. "These IP add-ons will allow larger organizations the option of phasing into IP telephony, by equipping their conventional PBX systems with IP functionality," said Stinson. "Full-scale IP-PBXs will compete for a share of new system shipments, especially after 2002 as the installed base of legacy systems begins to age." According to PBI Media Study, this new technology will lead to the industry's next bull market. "In the 2003 time frame, we envision a return to stronger growth in the enterprise voice communications market, with forklifts becoming more prevalent in the migration to IP Telephony. New applications made possible through IP Telephony could further accelerate this growth," said Stinson. The study indicated that while a handful of companies are beginning to ship IP-PBXs, such as 3-Com(NASDAQ:COMS), Cisco, and Vertical Networks, the market is still relatively small. More than 3,000 IP-PBX systems were shipped to the U.S. market in 1999, representing less than 1 percent of the enterprise voice communications market. Activity in this segment should increase significantly by late 2000 as Cisco (NASDAQ: CSCO) begins to push its latest release of AVVID, and Lucent (NYSE: LU) and Nortel (NYSE:NT) release IP phones for their IP telephony solutions. To obtain a copy of the study contact PBI Media at www.accessintel-infotech or 973-884-0100. PBI Media (www.accessintel-infotech.com), a global professional services company with offices in Parsippany, N.J., London and Washington, D.C., specializes in market intelligence for the telecommunications and information technologies industries. In addition to conducting primary research studies, the company offers a comprehensive range of professional services, including custom consulting, InfoTracksm and TelecomTacticssm competitive intelligence products, professional conferences, market and competitor analyses and custom marketing programs. PBI Media is a division of Phillips International, Inc. (www.accessintel.com), a private company based in Potomac, Md., with annual sales of $350 million. One of the leading publishers in America, with a fast-growing Internet business, Phillips provides a wide variety of quality products and services for both consumer and business-to-business markets. | |
