Hybrid-IP dominates in Q2

Pure-IP telephony shipments doubled and hybrid-IP systems took more than half of world market for the first time in the second quarter, according to research house Canalys.

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By  Richard Agnew Published  September 10, 2003

Pure-IP telephony shipments doubled and hybrid-IP systems took more than half of world market for the first time in the second quarter, according to research house Canalys.

While the worldwide market for customer premises telephony equipment remains flat on the surface, there are clearly signs of turmoil rising from the depths, the analyst group says.

Shipments of traditional voice PBXs are under pressure from two sides: pure IP-based telephony solutions from vendors in the IT world, Cisco in particular, and hybrid-IP solutions that offer the key business advantages of converged telephony, such as reduced call costs and unified messaging, along with a promise of investment protection and smoother integration with and migration from existing systems.

As a result, according to Canalys, worldwide telephony line shipments fell 1.7% year-on-year to 10,795,000, but hybrid-IP systems grew 14% to take more than half of market – 5,689,000 lines.

Pure-IP systems accounted for 6% of all lines shipped, up from 3% in Q2 2002, while traditional voice PBX shipments represented 41.4% market share.

Market leader Nortel gained 12.3% market share of shipped lines in the quarter, down from 12.9% a year before. Siemens’ share fell from 12.5% to 12.0%, while Avaya’s rose from 10.5% to 10.9%. Alcatel and Ericsson took fourth and fifth place with 7.8% and 3.8% respectively, while Cisco registered a 2.9% share.

The product lines of the leading European vendors - Alcatel, Ericsson and Siemens - are already dominated by hybrid-IP offerings. This technology approach also represents a small, but increasing proportion of Avaya and Nortel’s shipments.

Canalys research reveals that this is the first quarter where more than half of the lines shipped worldwide were attached to hybrid-IP systems, though this has been the case in Europe for more than 18 months. Conversely, the proportion of pure-IP telephony shipments in the Americas is more than twice the equivalent figure in Europe.

While Cisco's rise on the global voice stage will cause the established telephony equipment vendors some concern, more than two-thirds of its shipments are outside Europe, according to

"To a large extent, the different markets are shaped by the power of the local vendors and their long-standing relationships with the incumbent service providers," observes Alessandra Fitzpatrick, Canalys director and senior analyst.

"Though these are by no means set in stone and there is a general trend towards service providers losing interest in the hardware business and more multi-vendor channel activity taking place. This is taken for granted in the IT world, and has driven prices down through greater competition, but it is still a relatively new concept in the voice business,” she adds.

Fitzpatrick warns voice equipment vendors not to become complacent though. “There is still a lot of inefficiency in the voice business, and the opportunity for dramatic changes in its routes to market. The data world's desire to take share from voice competitors should not be underestimated and vendors all over Europe need to keep a close eye on how the relationships between vendors, service providers, integrators and resellers are evolving,” she says.

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