ANALYST NOTE

“Service provider session border controllers (SBCs) had a stellar first quarter, passing the $100-million mark to hit an all-time high for a single quarter. Operators are working on complex network migration and voice-over-LTE deployment plans, with sales cycles happening at different times for different elements, and SBCs benefitted from this trend in the first quarter,” explains Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research.

Myers adds: “That said, the overall global next-gen voice equipment market is down in 1Q13, coming off a solid 2012, and we expect a patchy year ahead while we wait for VoLTE networks in North America to kick in. Network transformation and VoLTE projects are ongoing of course, but this year’s equipment orders are not likely to match the magnitude of last year’s.”

CARRIER VOIP/IMS MARKET HIGHLIGHTS

• The total global carrier voice over IP (VoIP) and IP multimedia subsystem (IMS) equipment market fell 11% in 1Q13 from 4Q12, to $712 million, due to a drop in sales of legacy equipment and voice application servers
• For the 1st time, sales of IMS equipment exceeded those of next-generation voice equipment
• The top 3 VoIP and IMS market share leaders in 1Q13 are Huawei, Alcatel-Lucent, and GENBAND — all holding steady from the previous quarter
• Alcatel-Lucent had a particularly strong quarter; other vendors posting solid revenue growth in 1Q13 include Acme Packet, AudioCodes, Ericsson, Metaswitch and ZTE
• North America is the only region to post quarter-over-quarter growth in the market, up 26% in 1Q13, benefitting from LTE-related activity and network transformation projects
• Meanwhile, Asia Pacific declined nearly 1/3 in the same timeframe

Source: Infonetics

"Service Providers have been pushing telecom equipment vendors to deliver software-based core networking functions in over the past several months," said Chris DePuy, Vice President of Carrier IP Telephony research at Dell'Oro Group. "A handful of vendors are prototyping control-plane oriented functions such as IMS Core and Voice Application Servers in response to customer demand. This important architectural shift is sure to re-shape the telecom landscape in the coming years." The overall Carrier IP Telephony market, which includes devices used to serve both circuit switched subscribers and Voice over IP (VoIP) subscribers, reached revenues of just over $1.4 billion.

About the ReportThe Dell'Oro Group Carrier IP Telephony Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers' revenue, shipments, and average selling prices for both wireline and wireless voice core markets. The segments include softswitches, media gateways, session border controllers, voice application servers, IMS CSCF, and legacy mobile switching centers. To purchase this report, please contact Amy Yeh, call +1.650.622.9400 x222 or email Amy@DellOro.com.

About Dell'Oro GroupAs the trusted source for market information about the networking and telecommunications industries, Dell'Oro Group provides in-depth, objective research and analysis that enable component manufacturers, equipment vendors, and investment firms to make fact-based, strategic decisions. For more information, contact Dell'Oro Group at +1.650.622.9400 or visit www.DellOro.com .

Source: Dell"Oro Group

As the demand for big data continues to grow, migrating to a VoIP based system is even more attractive. According to this Misco blog, revenues from business VoIP services increased by 9 percent in 2012 as demand continued to grow. This pattern of growth is expected to continue, with Infonetics (News - Alert) projections putting market revenue at $82.7 billion by 2017.

Infonetics’ head analyst for VoIP, UC and IMS, Diane Myers, shared that the VoIP services market has passed the early adopter stage and moved into the mainstream in a number of developed countries. More regions are expected to follow in their footsteps, continuing to drive demand. The uptake of SIP trunking and hosted Unified Communications (News - Alert) is steady and driving a large portion of the VIP growth.

The capabilities extended to remote sites and brand locations provide a strong business case for VoIP deployment. As a result, according to Myers, the rising demand for hybrid solutions among multi-site enterprises is driving vendors to promote cloud telephony and UC services along with SIP trunking.

UC services and hosted VoIP have enjoyed the highest growth rate as revenues attributed to these services grew by 17 percent. The demand for cloud-based services among the enterprise remains steady, while the adoption of SIP trunks has jumped by 83 percent as compared with 2011. IP PBX (News - Alert) continues to dominate in the VoIP services market as dedicated enterprise systems still play an important role. Revenues generated in this space were up 9 percent in 2012.

The demand for VoIP access is expanding in global markets for sure as users realize the benefits afforded. This is especially true for mobile users. For those operating in the Netherlands, it appears that access to mobile VoIP apps has been a key driver. According to this Telappliant post, users there want access to VoIP apps at all times and 32 percent have access to VoIP capability on their smartphone.

VoIP enables these mobile users to leverage their data connection to complete calls, a more cost-effective way to communicate across the miles. The challenge, however, is that it cuts into revenue for the mobile carrier, which has limited VoIP integration for the mobile device. As demand continues to grow, however, this is one challenge likely to be overcome.

Source: TMCnet

According to a blog post from GetVoIP.com, Skype, Google (News - Alert) Talk and "paid services like Vonage" are the most talked about service providers. The post goes on to add that the trends associated with the uptake of these services must be examined in order to pinpoint where and when new developments may occur that shake up the VoIP market.

It's a bit more complicated than that, though, as there is a lot more to the history of VoIP. For example, VoIP has played a big role in both the government and education sectors, which typically require more than what free VoIP services like Skype and Google Talk offer. Indeed, the difference between paid and free VoIP is another important factor in predicting market performance.

Paid (News - Alert) services such as Vonage typically use traditional landline telephones, or office telephones, just connected through an existing high-speed Internet connection instead of phone lines. This type of VoIP has a number of distinct advantages over traditional phone service, most notably a much lower price point. Its primary advantages over free VoIP services, meanwhile, include the use of traditional phones and reliable fixed monthly pricing.

So, based on this information, what trends can we expect in VoIP going forward? According to GetVoIP, the market in general should continue to grow since the cost savings VoIP offers over landlines are attracting more customers every day. Until usage grows significantly, though, the VoIP market will likely stay fairly open.

Meanwhile, nearly 80 percent of businesses are expected to be using VoIP by the end of the year, with 49 percent already doing so. This makes a lot of sense as businesses have a lot more money to save by switching to VoIP, particularly in terms of how much cheaper PBX (News - Alert) software of hosted PBX is compared to legacy PBXs. Add in the money saved in maintenance and it becomes even more of a no brainer.

In terms of VoIP providers, more mobile-focused offerings like Facebook Messenger, which has been rolling out VoIP capabilities recently, and Apple's (News - Alert) FaceTime may surpass the current market leaders if they don't manage to keep up in terms of features.

The percentage of enterprises using SIP trunking will surpass the percentage using legacy T1 lines in 2015, according to a survey of close to 300 firms by Infonetics Research.

Those who do not plan to deploy SIP trunking said they liked their existing voice services or that their existing service contract was not up for renewal.

For most of the enterprises using SIP trunking, the PBX connection is made natively; fewer than one-third make the connection using premise-based enterprise session border controllers (eSBCs), according to the survey.

"SIP trunking adoption is growing as businesses seek to improve the reliability and lower the cost of communication services. That said, though more and more companies are implementing SIP trunking, it is far from being the ubiquitous standard of T1 lines or ISDN circuits. T1 lines are still the most commonly used trunking service today, and while their use is declining, our survey shows that North American businesses are using a combination of services; there isn't going to be a 100 percent cutover from T1 to SIP," observed Diane Myers, principal analyst for VoIP, UC and IMS at Infonetics and author of the study.

The Infonetics results jive with a survey conducted last year by Webtorials on behalf of Sonus Networks (Nasdaq: SONS). That survey of close to 300 enterprises found that enterprises are increasingly deploying SIP trunks, with one-third already having SIP trunks in place.

The shift by enterprises to SIP trunking reflects a broader move by the entire telecom infrastructure toward IP-based networks. At the Consumer Electronics Show (CES) held earlier this year, Hank Hultquist, AT&T's vice president of regulatory affairs, predicted that the transition to an all-IP network would occur by the end of the decade.

Hultquist stressed that it is getting harder to find equipment to maintain legacy networks based on time-division multiplexed (TDM) technology used in T1 lines and other legacy equipment. "The telephone network we all grew up with is now an obsolete platform… that will not be sustainable for the indefinite future. No one is making this network technology any more. It will become increasingly difficult to find spare parts for it. And it is becoming more and more difficult to find trained technicians and engineers to work on it," he told the CES audience.

Source: FierceVoIP

ANALYST NOTE

“The SIP trunking and hosted UC segments were marked by strong growth and dynamic supplier landscapes in the first half of 2012,” notes Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research. “Beyond traditional operators and service providers, we’re seeing a growing number of PBX/UC vendors, enterprise agents, system integrators, and resellers expanding into hosted UC offerings.”

VOIP AND UC SERVICES MARKET HIGHLIGHTS

• Infonetics predicts a cumulative $377 billion will be spent on business and residential/SOHO VoIP services over the 5 years from 2012 to 2016, driven primarily by SIP trunking and hosted VoIP/UC services
• NTT, the perennial leader of residential VoIP market, topped 14 million subscribers in 2Q12
• Roughly 15%–20% of all new IP PBX lines sold are part of a managed service or outsourced contract, making managed IP PBX the largest segment of business VoIP services
• SIP trunking revenue grew 23% in the first half of 2012 compared to the second half of 2011, led by strong activity in North America

Source: Infonetics

Source: IPCarrier

Global sales of carrier voice over IP (VoIP) and IP multimedia subsystem (IMS) equipment topped $800 million in 4Q12, thanks to a strong core of IMS, voice application servers, and softswitches.

Other key takeaways from Infonetics’ fourth quarter and year-end, “Service Provider VoIP and IMS Equipment and Subscribers” report include:

• IMS equipment sales made up just over 40% of total VoIP and IMS revenue in 2012, offsetting overall declines in legacy softswitch and trunk media gateways
• Though softswitches continue to decline on an annual basis, some operators are replacing early generation softswitches with new ones, opting not to switch to IMS
• For the full year, the Caribbean and Latin America region (CALA) posted the strongest growth of all regions, spiking 37%
• Huawei solidified its position atop the VoIP and IMS market share leaderboard in 2012, with around 1/5 of the global market; Alcatel-Lucent leapfrogged GENBAND to seize the #2 spot
• Standout vendors in terms of sequential revenue growth in 2012 include Alcatel-Lucent, BroadSoft, Ericsson, Huawei, Mavenir, Nokia Siemens Networks, and ZTE, all benefiting from the expansion of IMS networks

“As we predicted, after three years of annual declines, the carrier VoIP and IMS equipment market turned the corner in 2012,” commented Diane Myers, Infonetics’ principal analyst for VoIP, UC, and IMS.

“It’s still early days for IMS equipment and applications for LTE, but a handful of operators are placing orders that are positively impacting revenue. This is a taste of what’s to come over the next few years as wireless operators step into voice over LTE (VoLTE) and RCS (Rich Communication Services) begins to roll out across multiple regions.”

Source: Telecompetitor

A 'Second Wind' for Mobile VoIP

Juniper's new report found that improvements in network technology, increased competition and the move by telcos to join the OTT space will all come together to give the mobile "internet-voice" market a 'second wind'. However, as with Skype on the desktop, only a very small proportion will pay for the service, finds the report.

"Many subscriber sign up to an OTT service without ever planning to pay a cent for it, and some industry players do not have a short-term revenue model at all," notes the report author, Anthony Cox.

Key Findings

The report notes, however, that leading mobile VoIP players are becoming increasingly sophisticated in their service offerings and are developing more ways to monetise their services.

Further key findings from the Report, Mobile & Tablet Voice & Video Calling: Strategic Opportunities & Business Models 2012-2017, include:

• Specialist mobile VoIP companies are opening their Application Programming Interfaces to third parties including MNOs to gain revenues.
• The arrival of 4G will give further impetus to mobile VoIP take-up but potentially accelerate the decline in overall voice revenues.
• Despite market challenges, mobile video calling market leaders are finally beginning to monetise the mobile video calling sector through advertising and premium services.
• Circuit switched voice revenues will still continue to decline, but at the end of the forecast period will represent a substantial proportion of MNOs' revenues

The report includes a comprehensive analysis of the current situation in the mVoIP and mobile and tablet video calling markets and contains five year forecasts for mVoIP and mobile video calling users and revenues. It also contains mVoIP tablets forecasts as well as RCS and Circuit-Switched Forecasts.

IBISWorld last month divulged in its “VoIP in the US” report that “VoIP experienced massive growth at the start of the past five-year period,” and that “the expansion of mobile broadband networks will open up new avenues for growth.” Furthermore, they report that “concentration in this industry has increased over the past five years,” which only further reflects the effectiveness of today’s players in the VoIP and wholesale VoIP space.

In short, the U.S. VoIP market experienced a 16.7 percent annual growth rate over the last five years, generating $15 billion in annual revenue. This week, TMC blogged about these staggering numbers as well, reporting that IBISWorld also expects the increasing deployment of 4G mobile data networks to fuel continued growth in the VoIP market. Additionally, the blog reports that Juniper Research (News - Alert), the premier provider of mobile research, analysis and forecasting services, recently predicted that mobile VoIP users would reach one billion by the year 2017.

A full 65 percent of VoIP users in the United States get their VoIP service through cable companies such as Comcast (Nasdaq: CMCSA), Cox, and Time Warner Cable (NYSE: TWC). "Cable companies able to bundle VoIP service with cable service will fare best in consumer markets in the coming five years, while businesses will slowly but surely turn to VoIP for voice needs," according to the report.

IBISWorld expects the increasing deployment of 4G mobile data networks to fuel continued growth in the VoIP market. In addition, Juniper Research recently predicted that mobile VoIP users would reach 1 billion by 2017.

An increasing portion of VoIP customers are small and medium size businesses and enterprises. T. J. McCue, a contributor to Forbes magazine, estimates that VoIP technology has saved companies "millions of dollars" in phone charges.

Perhaps sensing the increasing popularity of VoIP, Google (Nasdaq: GOOG) announced it is extending its free VoIP calling offering from Gmail in the United States and Canada through 2013.

"Many of you call phones from Gmail to easily connect with friends and family. If you're in the US and Canada, you'll continue to be able to make free domestic calls through 2013. Plus, in most countries, you can still call the rest of the world from Gmail at insanely low rates," wrote Mayur Kamat, Gmail product manager, in a blog.

Source: IBISWorld

Source: IP Carrier

Source: IP Carrier

Source: IP Carrier

Source: IP Carrier