iLocus Global VoIP Market 2008 Report Highlights

Research firm iLocus recently released their Global VoIP Market 2008 report, which details their analysis of various VoIP market segments.

I received the executive summary today from a colleague, which contained a few snippets that got my attention. According to their report:

SIP Trunking has gained significant traction over the last 18 months. As of April 2008, there were over 5 million end users connected to SIP trunks. SIP trunking service revenues are forecast to touch $180 million during 2008 worldwide. By 2012 it is expected to be a $5 billion / year market.

I agree that the market for SIP trunking is gaining significant traction. I’d love to see a report on the breakdown of market share amongst SIP trunking providers.

In the US, Cable companies are leading the deployments. That however is likely to change with the Voice-over-Fiber offerings from AT&T (and possibly from Verizon in the near future). We expect AT&T to become the market leader in the segment over time. Verizon could have scalability issues due to its use of Open Source telephony platform for VoIP service.

I don’t think the dominance of fiber is a foregone conclusion. It is certainly an excellent pipe over which to provide voice services, given the amount of bandwidth it offers. I am still waiting for WiMax to shake out, and curious to see what happens when the mobile providers start to roll out some decent mobile data services.

Most telcos and switch vendors are working to get their Voice 2.0 (Communications Aware Mashups) developer programs in place. On one hand the availability of high level APIs such as the Web Services APIs opens up application development to hundreds of thousands of web developers. On the other, those developers who invest substantial amounts of money into their applications prefer to go direct to the end user, utilizing Open Source telephony platforms.

This is where telephony will be “bringing Sexy back”. I agree wholeheartedly.

Ad supported telephony is the new rage. There are ad agencies and enablers in the market that let a VoIP provider monetize the traffic through ads. It is interesting to note that the traditional telecom switch vendors are also starting to develop capability for ad supported telephony offerings. Some vendors are ready to support service providers that decide to adopt this type of model. Their application servers are able to mix existing and new services with advertising. Ad supported telephony is yet to be proven but there are various media oriented telephony companies in the field.

I’m not sold on this. I think that ad supported anything…long term…is going to be less viable. For things like 411 and enhanced services, I might be willing to tolerate some voice ads. For basic dialtone….I’m just not having it.

Estimated 1.18 trillion minutes of VoIP traffic was carried by service providers worldwide in 2007. That represents a 35% increase over 2006 VoIP traffic. Of these minutes, 286.3 billion was local call volume, 815.2 billion was national long distance (NLD) call volume, and 81.4 billion was the international long distance (ILD) call volume.

That’s a lot of minutes.

In the enterprise segment, an estimated 11.4 million desktop IP phones were shipped in 2007, thereby generating revenues of about $1.13 billion worldwide. Cisco leads the market having shipped 4.9 million desktop IP phones accounting for 43.8% market share worldwide. Cisco’s lead is followed by Avaya at number two and Nortel at number three.

Wish I could see some reporting on what percentage, overall, of those 4.9 million Cisco phones went into production on a Cisco platform. It would not surprise me to learn that 15% or more of Cisco’s phones sold in 2007 are being used in conjunction with a standards based SIP OSS derived platform or hosted service platform.

Enterprise VoIP gateway ports shipment in 2007 touched 14.8 million, and the revenues touched $500 million. Cisco took market share of 72.9%. Motorola emerged as the leader in 2007 for the ATA market. In 2007 vendors shipped a total of about 6.79 million ATAs to the business segment, thereby generating revenue of $314.2 million.

That’s a lot of ATAs. That’s an impressive number given the shakeout in 2007 amongst residential VoIP service providers in the US market. Motorola seems like the preferred CPE vendor amongst many cable operators….I’m guessing a lot of these ATAs were sold in conjunction with voice services from cable providers like Comcast.

In 2007 vendors shipped a total of about 6.9 million pure IP PBX end user licenses, thereby generating revenue of $678.5 million. These figures exclude hybrid systems. From 2007 onwards we started tracking pure IP PBX system only. Cisco (market share 60.5%) dominated the pure IP PBX market in 2007.

I assume here they are tracking “tier 1” vendors like Cisco, Avaya and Nortel. It would be very difficult to determine the number of end users serviced by OSS telephony platforms in 2007.