February 2005 Archives

Carrier equipment growth will be a staggering 36% for the next five years according to the following report. The surge of carrier attendees at ITEXPO in Miami last week gives credence to such lofty predictions.

WORLDWIDE CARRIER VOIP EQUIPMENT UP 36% TO $1.7B IN 2005 North American Subscribers Grow 1M to 17M 2004 to 2008

LONDON, February 23, 2005--Worldwide service provider next gen voice product revenue totaled $1.71 billion in 2004, a healthy 36% gain over 2003, setting a new high, according to Infonetics Research's quarterly market share and forecast service, "Service Provider Next Gen Voice Equipment."

Infonetics projects revenue to reach $5.9 billion in 2008, a five-year CAGR of 36%.

"We're starting to see strong equipment sales translated into tangible services," said Infonetics Research's Kevin Mitchell, directing analyst and author of the report. "For instance, there were 1.1 million residential/SOHO voice over IP subscribers in North America in 2004--with almost half coming directly from MSOs--and we expect that number to soar to 17.4 million by 2008."

"North America was a hot spot in 2004 as carrier adoption moved into the big time, and we expect Europe to start taking shape this year," Mitchell continued. "As we move deeper into the 21st century, it becomes more apparent that IP networks are the next gen networks for all forms of communication. It's hard to find a carrier not modernizing their network with VoIP or planning to do so."

The question of why so many network operators are converging their fixed networks or contemplating it is being addressed today at the IEC 21st Century Communications World Forum in London, where Mitchell is participating in the "Making Convergence Pay: Results to Date and Future Prospects" panel. As more and more providers invest in convergence to increase profitability via reduced costs and revenue growth from new services, the VoIP equipment market will continue to take off.

4Q04 and 2004 Market Highlights
                -  The media server and voice application server segments posted significant quarter-over-quarter gains
                -  Class 5 softswitch revenue made up over half of all softswitch revenue in 2004
                -  In a very fragmented market, Sonus is the worldwide media gateway market share leader with 16% share in 2004, and Cisco was second for the year
                -  Nortel leads the softswitch market for 2004 and for both class 4 and class 5 applications
                -  The 2004 geographic breakdown for total next gen voice products shifted to North America as many carriers in that region started serious deployments last year: 48% North America, 19% EMEA, 28% Asia Pacific, and 5% CALA

The Service Provider Next Gen Voice Equipment report tracks VoIP subscribers, media servers, session border controllers, media gateways (including RAC VoIP gateways, ATM switch voice gateways, and packet voice gateways), voice application servers, softswitches, and class 5 packet switches. Forecasts are updated quarterly and cover all regions (worldwide, North America, EMEA, Asia Pacific, and CALA).

Companies tracked in this service include Acme Packet, Alcatel, AudioCodes, BayPackets, Broadsoft, CIRPACK, Cisco, Convedia, CopperCom, Ericsson, Huawei, IP Unity, Italtel, Jasomi, Kagoor, LongBoard, Lucent, Marconi, MetaSwitch, Mera, Netrake, NexTone, Nortel, Pactolus, Sansay, sentitO, Siemens, Sonus, Sylantro, Tekelec, Ubiquity, UTStarcom, Veraz, Xener, and others.

For the table of contents, log on to Infonetics Research's Information Portal at www.info.infonetics.com. For sales, contact Larry Howard, vice president, at larry@infonetics.com.

A natural partnership between Telchemy, a VoIP performance management company and NexTone a session border controller maker has recently taken place.

Specifically, NexTone will feature VQmon/SA (Stream Analysis) call quality analysis algorithms in its MSC product for carriers and enterprises to use in monitoring, diagnosing, and managing network call and packet-related problems. NexTone's MSC enforces QoS policies across the network edge, thus enabling carriers and enterprises to route, manage, and control real-time traffic at minimal cost.

NexTone's MSC is deployed at the network edge and operates alone or in conjunction with a core call control engine such as the NexTone Multiprotocol Signaling Switch (MSW).  The MSC's FlexPeer capabilities, consisting of dynamic call admission control, SIP/H.323 interworking function, network address translation (NAT) and VoIP firewall functionality, provide IP carriers with flexible, secure interconnections to other IP-based carriers and enterprises.

Telchemy's VQmon/SA is used in mid-stream routers and switches and in VoIP test equipment, e.g., probes and analyzers, to support both non-intrusive monitoring of live calls and active test calls for on-demand troubleshooting. It further supports the Internet Engineering Task Force (IETF) RFC 3611 (RTCP XR) Protocol and the new QoS reporting protocols for International Telecommunications Union (ITU) H.323, H.248 and G.799.1 standards. VQmon/SA provides:

Listening and conversational quality metrics
MOS scores and R factors
Detailed packet/RTP statistics
Jitter buffer emulation
RTCP XR encoding/decoding with dynamic calibration

It should be a matter of time before other session border controller manufacturers make similar announcements.

The Miami Hyatt Hotel General Manager told our VP of Marketing; Mike Genaro that they served 590+ meals in the Riverwalk Cafe the Thursday of ITEXPO... More than any single day in their history! This is not including their other restaurant Japango or the bar.

According to the Miami Herald, in an article titled Tangled Web Lines (free registration required) ITEXPO had lines of people five-deep at many of the more than 100 booths!

To take a direct quote from the article:

Crowds have exceeded seating at some sessions. And the exhibition hall of service providers, which is open free to the public through today, had lines five-deep at many of the more than 100 booths when they opened Wednesday evening.

I'm speechless and humbled by this awesome praise by the Miami Herald journalists!

As a barometer of our VoIP industry, ITEXPO has shown me that the world is embracing VoIP like never before. I still can't believe we had people from over 70 countries at the show. It seems amazing to be able to attract so many people from around the world.

I said it last year and I should reiterate... We should call ITEXPO in Miami the United nations of VoIP (minus all the oil-for-food controversy of course.

See ITEXPO pictures.

MCI (chart) sales recently fell 10% in the 4th quarter. Revenue from consumer and small business customers dropped a full 21%! Long-distance subscriber counts are the reason according to MCI. Perhaps every Vonage user was once using MCI?

Seriously, the company blames its inability to use telemarketing as a reason for their decrees in new customer acquisition. While every VoIP provider is using the Internet more and more to attract customers, where are the MCI ads online? If they are running them I don't recall seeing them. I see Lingo, Vonage, CallVantage, Packet8... But where is MCI?

Doesn’t the company own UUNET? Doesn't UNET have something to do with the Internet? Last I checked, it did. Hello MCI, remember that whole dotcom thing? Well your competitors are using this "dotcom thing" now to get new customers. Now is a great time to explore the web as a way to get new customers as well.

Last Friday MCI CEO Capellas said in response to MCI shareholders against the Verizon deal, "In Verizon we see a partner that compliments our business," he continued, "We recognize the input of shareholders. We acknowledge receipt of Qwest's proposal and remain respectful to all parties."

Qwest is willing to set a third bid for MCI, even though their latest bid is a billion dollars greater than that of Verizon. The only thing Qwest wants is some respect. They want to talk with MCI. The latest bid pays cash at a faster rate than the prior offer and protects MCI from the potential of Qwest shares dropping by up to 10%. Problem is Qwest's stock dropped over 8% in response to the new offer.

While Qwest's stock tanks, Verizon's (chart) in fact is increasing and just rose almost 2% in a day to $36.20. The market it seems may be rewarding Verizon for being able to pull of an acquisition so cheaply while Qwest is forced to pay a premium. Perhaps Verizon shareholders think MCI is selling too low?

It has been an incredible week and I can tell you now that the excitement level in VoIP has never been so great. People from over 70 countries came to ITEXPO this week and the attendees were hungry for information. Exhibitors told me that many of these people weren't neophytes. Many had already implemented VoIP and were looking for other voice components such as QoS monitoring to put in their network. Others knew what to ask for and were far along the buying process.

If there was one theme at the show it was "crowded," which to me is a great barometer of how much buying is going on in our industry. This is not hype, this is real market research done by asking many of the exhibitors if they are selling product. They are.

A staggering amount of deals were done on the show floor and one session border controller company who requested anonymity sold a million dollar order this week and collected over 50 other hot prospects -- some worth potentially more! There seems to be lots of growth in this segment of the market.

I could go on but it is simple enough to say that every exhibitor was thrilled with the quality and quantity of attendance. We hade a tremendous amount of people and in this massive audience was enough enterprise decision makers, service providers, VARs and developer to keep every exhibitor happy.

We have a very diverse audience in VoIP, the most diverse of any event in the space and achieving this level of satisfaction is something unexpected. I have to thank the team at TMC for pulling this off as well as to many of you that participated in the event all week.

Nothing makes me happier than to see our market grow to where it is today. I still remember deciding to launch Internet Telephony Magazine in 1997 when there were few sales taking place and now we have a multi-billion dollar industry that is thriving.

I promised many of you to share my term now but I can't only due to the fact that I simply need a nap and I don' want to write something quick and dirty. I am going to try to get a few winks as my pillow and I have been strangers all week. It is my sincere hope to write about the term and its implications this weekend so stay tuned and have a great weekend and a safe trip back home, to whichever state or country you came from!

Tomorrow I will be making a significant announcement. Well I guess it is today -- in about 8 hours and 45 minutes. At 9:00 AM I go on stage to share the new term with you all. I am putting the final touches on my presentation and for those of you that have waited a few days to hear what I am about to tell the industry, I hope I exceed your expectations.

For those of you that aren't aware of what is going on, tomorrow I announce on stage at ITEXPO the birth of what will either be a new industry or a better term for where communications is going.

This is a phrase I heard repeatedly at the most successful ITEXPO EVER! Thank you all for coming and making this show such a success. We had an amazingly large audience and exhibitors told me this is the most qualified audience they have ever witnessed at a show while conferees said they were happy with our conference program and appreciate the fact that TMC values their educational experience.

If this ITEXPO is not a barometer of the industry's success and phenomenal growth, I am not sure what is.

Without all of you... Attendees and exhibitors, we can't have great shows so thanks for coming in droves and I am humbled by all the compliments you gave me over the last few days.

My thanks also to the TMC team for working around the clock to help keep up with the demands of this event.

Witness the "Mass of humanity" at ITEXO Miami 2005.

What I really love about ITEXPO events is the networking opportunities and how much I can learn in a few minutes of relaxed conversations with colleagues. I had a chance to hang out with close friends and new ones in the industry last night. I got to see Mark Lyons from Vonage for example and noted he is one of the most passionate people in VoIP. He is the VP of Sales -- VAR Channel and was sharing stories of meetings he has had in China and more. If you want a good laugh , ask him about China. Vonage came up a few times at the show and the "word on the street," is that the company will have one million customers by the middle of the year. They have outgrown their NJ facility and are moving soon. Tom Boone of NETXUSA invited a group of us to dinner and I met him for the first time last night. He could win the most down-to-earth person in VoIP award.

When you get a group of passionate people from the industry together and start drinking some wine you learn a great deal about everyone's view of the market. Mark Spencer of Digium was there as was Christian Stredicke of SNOM.

It is interesting to put people from the open source community together with those in more traditional commercial businesses. You get heated and passionate discussions as the business models are so vastly different.

If there is one thing I learned it is that you don't want to debate Mark Spencer or play him in pool for that matter. He is eloquent, to the point, very knowledgeable and almost cleaned the table on a single turn last night. (Thankfully he was on my team as I think I sank one ball in two games!)

I am actually debating Mark myself today on-stage at 10:15. We'll be discussing open-source Vs. closed systems and we know who is taking which side already. Mark can distill complex technology into English rapidly and is very likable so this will be the toughest debate I have ever had.

I figure the best way to do this debate is a "Hardball" style format where we debate each point. I may open it up to the audience to see if they have some questions to ask as well. It will be a highly educational day today. We have the best speakers we have ever had at ITEXPO and many people told me last night how happy they are with the conferences. Keynotes start at 9:00 AM and I am looking forward to seeing you all there.

The exhibit hall was a mob scene tonight. Exhibitors told me this is the busiest show they have ever seen, beating the Internet World events of '99. Thanks to all of you that have made this show such a success and for those of you that told us you learned a great deal at the event.

These shows are all about you, the implementer of VoIP. This I the exact reason why all of my sessions took so many audience questions as your questions are always the best ones.

The Future of IP telephony session tonight was my favorite panel of the show because I got to learn where the industry's going and there was such a great exchange between the audience and the panel.

The audience interaction tonight has convinced me that this session is worth doing again and again. Thanks to those of you that participated!

Overwhelmed! That is the best word to describe my feeling as I walked through the conference sessions today. Virtually all conferences were standing room only. For example, Toshiba's David Fridley spoke in an IP PBX session that had over 150 people and at the same time there were 500 -- Yes, 500 resellers in the keynote room listening to a panel session I moderated on how to make money in VoIP.

I don't have final numbers but it seems like around 800 people in the conferences this first day so far. Amazingly many of the conferees from the 70 registered countries were everywhere. Speakers couldn't believe how international this show has become. The exhibit hall is open today at 6:00 PM and then on Thursday and Friday. Please see www.itexpo.com for specifics. I am looking forward to seeing the hall as I haven't been down there in a few hours. Instead, I came to my room and blogged the great news with all of you.

One last point, we had a session border controller shoot-out running simultaneously with a UNE-P to VoIP Summit and both were standing room only when I checked the rooms. This event has become a strong service provider show. Many speakers pointed out how our service provider audience is growing very quickly.

Last night I called MIS frantically due to a Blackberry failure in the middle of ITEXPO. A few hours later the problem was solved. Credit it seems goes to RIM itself since every Blackberry everywhere didn't' work last night. If you're about to scream at MIS, hold off... It wasn't their fault.

I am getting ready for my keynote in about an hour. VoIP 2.0 is here!

You want to know when attendees come to your event? You don't need to see them. Just come to your hotel room and try to work the morning of conferences and watch your Internet speed die. The Hyatt's Internet service last year was "Not Exactly," but now they have upgraded by outsourcing the service to T-Mobile who has Hot-Spotized (is that even English) the hotel.

At least T-Mobile knows what they are doing. They charge you a lot but on the back-end you get rock-solid and reliable service. That is until the attendees showing up.