IP TELEPHONY PENETRATES OVER 40% OF U.S. ENTERPRISES
New InfoTech Study Shows that Market Demand is Shifting
January 22, 2002 - IP Telephony

PARSIPPANY, NJ, January 22, 2002 – Over 40% of U.S. companies with more than 500 employees have begun to convert their corporate phone systems from the traditional Private Branch Exchange (PBX) model to IP (Internet Protocol) LAN Telephony, according to a new study from InfoTech, a leading market research and consulting firm based in Parsippany, NJ.

Based on extensive primary research conducted during the 3^rd quarter of 2001, this study, titled "IP LAN Telephony: Probing the Shift in Market Demand", represents the third consecutive year that InfoTech has analyzed and reported on this emerging market. As a result, InfoTech is able to track year-over-year changes in market demand and provide insightful analysis on the reasons for those changes. The current study discusses how and why the demand has shifted in the following important market segments:

• Demand declined among high-end enterprises, but increased among mid-sized businesses
• Demand decreased among data network decision-makers, but was higher among telecom decision-makers
• Demand increased for IP-enabling existing PBXs, particularly for large systems with greater than 1,000 phones
• Demand declined in locations with between 40 and 1,000 phones

"Among the businesses that have begun to implement IP LAN Telephony, over 80% reported that they were satisfied with the reliability and voice quality of these initial systems," states Terry White, lead analyst for the study. "90% indicated that the cost savings met their expectations and 40% have already committed to purchase more systems."

According to InfoTech, the U.S. market for traditional PBXs and Key/Hybrid systems with more than 10 phones declined by 20% in 2001 vs. 2000. During the same period, IP LAN Telephony shipments tripled. As a result, this new technology accounted for 12% of the new line shipments in the overall market.

"IP LAN Telephony had a double impact effect on the traditional PBX market in 2001," notes White. "Some businesses decided to purchase IP LAN Telephony systems instead of legacy PBXs. Others postponed PBX purchase decisions, because they wanted to implement IP LAN Telephony but weren’t sure whether this new technology was quite ready for prime time."

The InfoTech study forecasts that the annual revenue from IP LAN Telephony systems will grow by 32% per year from 2001 to 2006. However, during the same period, the market for related applications and services will grow twice as fast. By 2006, the combined revenue will exceed $17 billion, with applications and services accounting for nearly 80% of the total.

InfoTech is a subsidiary of PBI Media, LLC, specializing in global information and professional services for the telecommunications and data networking industries. InfoTech offers a comprehensive portfolio of information and professional services, including market and competitive intelligence programs, business consulting, sales support tools and training, primary research studies and custom marketing programs. Further information about InfoTech can be obtained at the company's web site at www.pbimedia-infotech.com.

Contact: Mark Ricca, 973/602-0124
infotech@accessintel.com