IP telephony adoption growth set to continue

9 Jun 2006

MUNICH: Adoption of IP (internet protocol) telephony is set to grow annually by 37pc worldwide over the next three years to reach 457 million lines, according to the networking equipment maker Avaya.

Speaking at a press conference in Germany yesterday, Don Peterson, chairman and CEO of Avaya, said that there would be continued rapid growth in the adoption of IP telephony. “The question individual users have is when and how to adopt it, not whether to go there,” he said.

Last year around 14pc of the market had converted its telephony systems to IP. By 2009 this will have reached 46pc. “By 2009, still less than half the market will be converted; it’s a huge opportunity as we see it,” added Peterson.

Avaya has implemented what it claims is one of the largest enterprise IP networks in the world for the FIFA World Cup, which takes place over the next month in Germany.

Historically, the market has been dominated by companies with a legacy in the telephony equipment business, such Siemens, Alcatel, Nortel and Lucent (which spun off this business to Avaya). Cisco, with a background in data networking, has since entered the fray but the latest competitors to arrive come from a software background, including Skype, Google, Microsoft and Yahoo. “Correctly, I believe, they are viewing the value of voice in delivering their service to the marketplace and they will challenge us in the enterprise communications business,” said Peterson.

Dave Johnson, president of Avaya International, pointed out that IP telephony was becoming more strategically important to many businesses instead of simply providing an opportunity to save money on telephone call charges. “Companies aren’t looking at this for cost any longer; they’re looking at it for business value and making the business more efficient,” he stated.

Avaya grew its revenues from US$4.069m to US$4.902m in its last fiscal year and has been steadily increasing the level of business it wins outside the US from current levels of 42pc. “We won’t be satisfied until we’re north of 50pc,” said Johnson.

The company has also expanded through acquisition. Among these was Spectel, an Irish company that specialised in developing audio and web conferencing applications.

By Gordon Smith