Upgrades fuel VoIP enterprise market as companies replace aging technology

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.

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.

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. Products from the late-1990s like the Cisco AS5300 VoIP Gateway were being upgraded to newer models like the Cisco AS5300 for improved performance and fuller feature sets. Currently the AS5350XM, with an even faster processor, has replaced the AS5350 as the cutting-edge gateway in the family.

Innterest in IP telephony has also exploded largely in part to the overall value and cost savings, as well as additional features such as virtual numbers and videoconferencing.
These service options offer Telcoms as well as cable and internet service providers (ISPs) the opportunity to diversify their product offerings and explore additional revenue streams. As more companies engage in marketing aimed at bringing digital phone service to the mainstream, we can expect to see demand for the hardware that powers the digital phone revolution to increase in kind.

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.


While many companies have already embraced this new technology, much of the mass-market is still uncertain of the reliability and ease of use associated with VoIP technology. Unlike the technology-savvy market segments, which have been generally accepting of this new technology, the average consumer still needs reassurance that the benefits of computer-telephony can be easily integrated into their present communication lines. For instance, questions surrounding access to 911 emergency services has been a major factor in the acceptance rate of digital-phone service. With industry cooperation, and a targeted marketing campaign to increase awareness about the advantages of VoIP, the average user will be more comfortable with the switch from traditional telephony.