By Chris Hill
Summary: Economic recovery and integration of VoIP fuel market rebound.
Note: I wrote this article to answer the questions I commonly get from our customers asking about the direction VoIP technology will take in the near future. I wanted to address where the market currently stands, and what we can look for in the coming months. For further reading, I would recommend reading the articles in the reference section and conducting supplemental searches on the subject.
San Francisco, CA June 19, 2006: Largely due to the integration of computer-telephony networks and communication tools, enterprise hardware spending has rebounded from the slow economic growth that plagued much of the market in 2001-2003.
Coupled with an increase in customer demand for digital-voice technology and a surge in upgrade purchases, manufacturers are seeing double-digit increases in sales. According to Internet News, revenue for enterprise equipment reached $98.3 billion in 2005 and is expected to reach $121.7 billion by 2009. Fueled by next generation technology and the need to replace aging hardware, voice-processing equipment also rebounded in 2004-05. Following three years of steady declines, Computer-telephony integration (CTI) was the fastest-growing piece of the enterprise market in 2005, with a 10.5 percent increase to $5.7 billion.
Many experts attribute this resurgance in demand to the effective useful life of legacy equipment. According to a study conducted by the Telecommunications Industry Association (TIA), earlier this decade most enterprise equipment was relatively new; however, by 2004, leases were expiring and companies were seeking to upgrade to newer technology. Networking products from the late1990s like the Cisco AS5300 VoIP Gateway were being upgraded to newer models like the AS5350 for improved performance over past models. Currently the AS5350XM, with an even faster processor, has replaced the AS5350 as the cutting-edge gateway in the Cisco family.
With solutions like VoIP and video conferencing emerging as the future of business communication, companies are increasingly transitioning towards newer technologies in order to maintain a competitive advantage in their market. Anticipating the total revenue from enterprise equipment to reach $121.7 billion by 2009, TIA predicts the demand for legacy technology such as PBX to drop in over-all market growth to a mere 1.1% by the year 2009. While in the short term, IP/converged systems will incrementally boost PBX sales, once the installed base becomes predominantly IP, we will see a sharp decrease in replacement demand for these older technologies.
“Study: VoIP Fuels Enterprise Equipment Spending.” Internet news. June 30, 2006. July 25, 2006. <http://www.internetnews.com/ent-news/article.php/3617361>
“U.S. Network Equipment Market Rises 15.9 Percent in 2005 Reaching $19.9 Billion — Second Consecutive Double-Digit Increase Following Three Years of Decline .” TIA Online. July 12, 2006. July 25, 2006. <http://www.tiaonline.org/business/media/press_releases/2006/PR06-64.cfm>
Chris Hill has a collective 5 years experience in IT sales. He is currently Director of Carrier Sales for Townsend Assets Group (TAG), a leading reseller of pre-owned data networking and Cisco VoIP equipment. With more than 2500 customers in 23 countries, TAG helps customers acquire, manage and remarket their technology. For more information go to http://www.townsendassets.com/
For information on current Cisco AS5300 , or other pre-owned networking hardware, be sure to check out our inventory page for current pricing and specials. We strive to help our customers find the right equipment to meet their unique needs. I can be emailed at email@example.com