VoIP by the Numbers

Two sets of numbers crossed my desk today. Looks like more evidence that VoIP is here to stay.

Stats from Infonetics and TIA both show significant growth.

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NUMBER OF VOIP SUBSCRIBERS MORE THAN TRIPLES IN 2005 REACHING 4.2 MILLION; EXPECTED TO GROW TO 18 MILLION BY 2009

Arlington, Va. -- The number of residential VoIP customers (not including PC-to-PC services) more than tripled to 4.2 million in 2005 and is expected to grow by a compound annual rate of 43.9 percent through 2009, reaching 18.0 million. This was on the heels of an eightfold increase from 150,000 at the end of 2003 to 1.2 million at the end of 2004, according to the Telecommunications Industry Association's (TIA's) newly released TIA's 2006 Telecommunications Market Review and Forecast.

The residential VoIP market is driven by a number of factors, including the lure of inexpensive voice communications. VoIP thus far has been less affected by a variety of regulations and taxes than traditional telephony, helping to keep prices low. Increasing broadband subscribership is also driving the market, because VoIP works best over a broadband connection, and utilization of this existing connection also lowers the cost of providing the service. The U.S. broadband market has grown explosively from 4.5 million subscribers in 2000 to 41.3 million subscribers in 2005 and is expected to grow an additional 28 million to 69.2 million by 2009, a 13.8 compound annual increase. Another factor is the range of features included with VoIP that are either unavailable or available only for an extra charge with traditional phone service, such as sending subscribers emails when they receive voicemail and integrating personal applications such as address books.

VoIP revenue has had a growth pattern similar to residential VoIP subscribers. VoIP revenue increased from $25 million in 2003 to $200 million in 2004 and $1.1 billion in 2005. Revenue is projected to increase 46.7 percent on a compound annual rate through 2009 reaching $5.1 billion. VoIP carriers are now moving beyond the residential market to address the small-business market and are beginning to introduce services geared to small businesses, which bundle a number of lines and minutes for a flat price or which bundle VoIP with broadband services.

Worldwide IP PBX Revenue Up 23%, TDM Systems Down 15% in 2005

BOSTON, Massachusetts, February 28, 2006--The enterprise telephony market continues its steady transition from circuit switching technology to packet switching technology, with worldwide TDM system revenue falling 15% and IP PBX revenue rising 23% between 2004 to 2005, according to Infonetics Research's latest Enterprise Telephony report.

Together, worldwide TDM and IP PBX systems revenue totaled $8.1 billion in 2005, a 12% increase over 2004, and will grow 43% between 2005 and 2009, when it will reach $11.6 billion as organizations continue to move to VoIP. In that five-year span, IP PBX revenue is forecast to jump up 82% while TDM revenue will plunge 88%.

For the quarter, PBX/KTS revenue totaled $2.2 billion in 4Q05, up 1% over 3Q05, and 10% higher than a year ago. TDM system revenue was down 6% in 4Q05, and IP PBX revenue nudged 3% higher than last quarter.

"The PBX market came in at our expectations in 2005, and from a global perspective is doing very well," said Matthias Machowinski, directing analyst at Infonetics Research. "Worldwide revenue growth accelerated in 2005, although it's mostly coming from EMEA, Asia Pacific, and CALA. North America lost revenue share in 2005 as things slowed down here, showing just 4% revenue growth for the year."

More Highlights

- In the overall PBX/KTS systems market, Nortel, Avaya, Siemens, Alcatel, and NEC (in that order) lead in worldwide 2005 line shipments

- Nortel leads the North American IP PBX market in line shipments for 2005, followed by Avaya and Cisco, but it's a very close race among all three

- Alcatel leads the IP PBX market in EMEA in 4Q05 and for the year, followed by Siemens

- Cisco dominates the market for IP phones with 42% unit market share in 2005

- Hybrid PBXs accounted for 65% of 2005 PBX/KTS revenue, TDM 23%, and pure IP 12%; hybrids and pure IP will continue to increase through 2009 at the expense of TDM

- 44% of 2005 PBX/KTS systems revenue came from EMEA, 32% from North America, 19% Asia Pacific, and 5% CALA

VoIP by the Numbers

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VoIP by the Numbers