Battered IP comm market looks for growth engines

Today's report by the Dell'Oro group that carrier IP telephony revenues were down 25 percent in the first quarter is just the latest in a long line of negative reports for companies in this space. The carrier market started slipping in the second quarter of 2008 and has still not seen an upswing. Some reports don't see a rebound in the market until 2011 when global sales are expected to increase due to growth in developing markets. Enterprises are retrenching and delaying upgrades to their communications equipment and services in the process, making revenue growth seem elusive in the interim.

So what are vendors and service providers to do during the lull in spending? Are there viable alternatives to cost cutting and headcount reductions while waiting for the Great Recession to end?

The glimmer of hope in the Dell'Oro report came from sales of session border controllers and SIP trunking equipment and services. Frost and Sullivan also estimated the SIP trunking market will bring in twice as much revenue as hosted PBXs by 2012. Another report from Infonetics in March saw IMS revenues climbing. As enterprises delay cap ex, hosted services and cloud computing options have shown potential to drive revenue growth as well, but companies haven't offered many hard numbers about the uptake of these services.

One notable trend that could be attributed to the market downswing is an increased focus on high-level partnerships and reselling agreements. HP and Alca-Lu's deal today is expected to drive billions of dollars in revenues, at least by the companies themselves. HP and Microsoft also announced a major partnership around UC in the past month, and Cisco released a statement saying that UC and collaboration would jointly comprise a $34 billion market opportunity. Another buzz word and potential revenue driver is HD voice, which many industry watchers think could revitalize the VoIP industry entirely.

Perhaps a blended approach of new technologies and offerings can revitalize the space, or the economy begins climbing sooner than expected and brings IP telephony revenues with it. Either way, we'll be keeping an eye out for "green shoots" in the IP communications space through this rainy early summer in D.C., even though reports are rather bleak at the moment.

- Pete
@fiercevoip