IP telephony tipped for monster growth

28 Jan 2003

Despite the apocalyptic downturn that has savaged the telecoms business, a new report from the International Data Corporation (IDC) has taken a more optimistic view, claiming that the market for internet protocol (IP) telephony in the long term could grow to become a US$15bn market.

IDC’s worldwide IP telephony equipment forecast 2002-2007 believes that the overall IP telephony market is projected to increase at a compound annual growth rate of 45pc to reach a revenue base of US$15.1bn by 2007. IDC is projecting the best growth in enterprise systems such as IP-PBXs. For this year, the current forecast shows a 66pc increase in equipment sales to enterprises.

IDC believes that 2003 will present a major window of opportunity for both IP-PBX vendors and carriers looking to roll out IP Centrex and voice-over IP virtual private network (VPN) service. In switching to IP telephony, IDC warns, carriers may experience organisational barriers as well as knowledge transfer problems.

The report also warns that large telecom suppliers might be tempted to forestall a stronger commitment to next-generation technology to optimise revenue from their existing legacy product base.

While the IDC report notes that this may appear to be a good short-term strategy, it is not one without serious long-term implications. Tom Valovic, director of IDC’s IP telephony division, explains: “The danger here is fairly obvious – R&D and technology development can fall behind along with the design, test and installation experience needed to provide a strong transitional capability for traditional customers.”

By John Kennedy