VoIP revenue declines in 07Q1, it means anything?
I noticed the report by Infonetics betrayed a fact that “VoIP Equipment Revenue Declines in Q1 07″. According to the author, “This is a seasonal effect more than anything else,” . I don’t think so. I doubt the benefit of VoIP to the end users by posting “VoIP save money?” three months ago. It should be reflecting something more than seasonal effect.
VoIP is a novel technology that can improve the productivity of the fibers and circuits by mulplexing or converging more business into one pipe. So the prediction is the how much you can multiplex into your existing IP pipe. For telco operators, they can easily consolidate adequate voice traffic and multiplex them to make full use of their existing infrastructure. But it’s not always true for average enterprises.
See the full story by Infonetics:
Equipment Revenue Declines in Q1 07
by Jim Barthold, Fri, June 8. 2007
While research compiled by Infonetics Research showed that Q1 07 revenue for next-generation VoIP equipment slipped 8% from the last quarter of 2006, the decline is no cause for alarm, the research report’s author said. “This is a seasonal effect more than anything else,” said Stephane Teral, principal analyst at Infonetics Research. “A lot of people expected that the first quarter wouldn’t be that great. The fourth quarter was very robust so we expected some kind of slowdown.”
Overall, he said, VoIP equipment growth continues to move along nicely: “If you compare year-over-year, the market’s still growing and everything is going VoIP.”
Not all equipment revenue was down in the quarter, he added. Session border controllers (SBCs) showed a 10% uptick and softswitches were up nine percent. The market, however, was dragged down by media gateways, which came in at minus 24%. The combined media gateway and softswitch market totaled US $717.3 million in the quarter led by Nortel, Siemens and Sonus. Huawei, Infonetics said, came in fourth replacing Cisco which dropped to fifth.
The media gateway decline happened partially “because some of the big guys have completed major projects over the last year” and are budgeting for their next steps, Teral said, using Time Warner Cable as a bellwether company. “They have completed a major project and they are increasing cap ex to make sure they have enough funding to continue their migration to IP.”
Overall, he said, the VoIP market is showing its age a little bit but still growing at a respectable 14% year-over-year rate.
“That’s very significant. If it was up only five percent then we would say that’s pretty dismal, but it’s not dismal,” he said.
Even while VoIP infrastructure spending levels out over the next three years, new spending will occur for on next-gen voice and IMS-based equipment, he said, and should reach about US$6.9 billion worldwide by 2010 with about a half billion of that coming from IMS core equipment, including HSS and CSCF servers.
“The IMS core is not adding that much at this point,” he said. “There is no big worry about the market based on the first quarter. You’ll see ups and downs with this but usually the first quarter is weak.” To the contrary, Teral said, too much growth could have been a bad sign.
“We can grow 14% year-over-year but had we had plus 14% form the last quarter I would actually worry because this could become unsustainable very quickly based on the economic theories we are trying to apply,” he said. “To me it looks like we’re on the right path. It was actually good to cool off a bit during the first quarter.”
Even with all the new next generation equipment and IMS, Teral said he doesn’t expect the market to mature even in the 2010 time frame. “When I look at my curve, I don’t really have a plateau … because there is always new stuff coming in,” he said.
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