The Nortel Effect?

At least two analysts are now predicting a drop in VoIP/SIP Trunking growth for enterprise customers.  This was not surprising as I reached the same conclusion some months ago. Using my limited cognitive abilities, I did not see how the growth in VoIP/SIP Trunking could be maintained during this period of economic stress and uncertainty. When budget considerations are added to the mix, it is no surprise that enterprises are closely examining cash flows and capital expenditures. However, that is not the primary influencing factor according to Dell'Oro and In-Stat.

Dell'Oro and In-Stat are predicting a decline in growth due to a growing concern over vendor volatility. Customers are postponing purchases as they wait to see the performance numbers of their favorite vendors, Cisco and Avaya. Moreover, they want to see what condition Nortel will be in as it exits bankruptcy. Even with Nortel leading the pack with regard to vendor volatility, it came in third in new  IP line shipments.

What does all of this mean to those of us selling into this environment?

Enterprise decision making is taking longer than ever. What use to take six month seems to be taking nine to twelve months.  At Broadvox, we have been engaged with certain enterprise accounts for over a year as they mull equipment acquisition and upgrades. It is unclear to us whether their decision making is more difficult due to the weakened economy, current company performance or vendor volatility. Our position is to continue to present the monthly cost savings our analysis shows and push for an order to begin provisioning the service.

In the meantime, we continue to see very good growth in the SMB markets. Here there is greater competition of vendors, greater range in pricing and a better match with the entrepreneurial spirit of the smaller IP PBX OEMs and the SMB customer base. The timeline from contact, to qualification, proposal and closure has not changed as dramatically as that of enterprise prospects. So, we continue to hunt and catch small game as we seek to bring down an elephant. This has allowed us to double our SIP Trunking revenues over the last five months. The driver for this is cost savings but I also think VoIP/SIP Trunking is gaining in credibility. Voice quality, reliability and QoS capabilities are making it a more robust solution for businesses of all sizes.

See you on Monday with another great recipe and more...

Have a great weekend!