Natural replacement remains the most dominant driver for new deployment in the world enterprise telephony market, while greenfield sites are leapfrogging to IP systems.
Analysis from Frost & Sullivan finds that the worldwide enterprise telephony market shipped more than 48,4-million lines in 2007 and estimates this to reach 62,1-million in 2013.
"Replacement continues to be the main driver for market growth and, more specifically, IP telephony adoption," notes Frost & Sullivan unified communications programme director Elka Popova. "Approximately 71,7% of all lines shipped worldwide in 2007 were IP-capable."
Central America/Latin America (CALA) is the fastest growing region followed by Asia Pacific (APAC). Both these markets have strong replacement activity in addition to greenfield deployments arising out of broad-based economic growth.
North America had the slowest growth, signifying high penetration levels of IP. For the first time, IP telephony revenues exceeded TDM telephony revenues in APAC in 2007.
EMEA however remained the largest region in the world enterprise telephony market. Amongst tier-1 vendors, Cisco experienced the fastest growth in EMEA.
However, IP penetration to the desktop remains low overall, with North America boasting a higher penetration than the other regions. A major challenge for IP telephony vendors is that buying organisations prefer phased migration to forklift upgrades.
"Vendor consolidation might affect market confidence," cautions Popova. "A weakening supplier position will boost buyers' power, even as strong indications emerge of a price decline."
Vendors are migrating from hardware to software models to preserve margins and improve competitive positions. They are increasingly relying on off-the-shelf hardware components in order to lower the cost of their solutions and to be able to focus their efforts and resources on advanced application development.