Reseller Revnues In Services Not Devices: IDC Print E-mail
Written by Adam Gosling   
Friday, 27 October 2006
Industry research outfit, IDC Australia, reckons its uncovered the secret to making money out of the VoIP market. Services it says are the Golden Egg resellers and integrators need to pursue if they are to maintain revenue in an increasingly competitive environment.

According to IDC's latest report "Australia Business Voice over IP Services and Equipment 2006-2010 Forecast and Analysis: Golden Egg Hidden in Services." The convergence of voice and data grew at accelerated pace in 2005 and 2006.

But the forecasts are less rosy says the number cruncher warning that IP Phone and IP Private Branch Exchange (PBX) revenue growth is set to slow down to about half the rate of 2005 and 2006, due to competition price squeeze.

IDC Research Director for Telecommunications. Landry Fevre, warns convergence integrators that they must not become too reliant on equipment sales revenue. "Opportunities over the next 5 years will be in managed convergence services, specifically in managed VoIP security, network capacity/support, application management, hosted voice solutions and contact centres," he said.

To compete in the increasingly aggressive market, equipment vendors, ISPs, carriers, service providers and system integrators will have to target specific industrial verticals and provide value and usage based solutions rather than technology solutions, says the report.

In its research, IDC finds that vendors are introducing VoIP applications along with their IP PBX solutions to provide improved productivity and work efficiency to their customers.

"As VoIP market penetration increases and the complexity of deploying applications decreases we expect to see wider use of open standards. In addition we predict the integration of voice functionality into critical business applications that can be deployed out of the box," added Fevre.

IDC expects the IP Phone and IP PBX revenue to grow at CAGR 14.49% to reach A$606.76 million in 2010. The market growth will slow down from 2007, at about half the 2005 and 2006 growth rates with Cisco, Avaya, Nortel and Alcatel leading the way.

The total market revenue of Australian VoIP service, including Managed/Hosted VoIP and IP Centrex will increase to A$462.12 million in 2010 at a CAGR of 39% with Telstra, Optus and a slew of smaller players still tuning their offerings and pricing.

As IP telephony penetration is increasing across companies of all sizes, competition will become increasingly aggressive. Besides providing appropriate solutions, equipment vendors will also need to constantly condense their margin to maintain market share.

This becomes more important if they want to lead on the SMB front. Consequently, they need to find additional ways to generate profit, such as VoIP application licensing fee and system upgrade services.

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