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Analyst Warns Of Meagre Margins |
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Written by Adam Gosling
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Monday, 30 October 2006 |
Competition in the enterprise telephony space is so intense
around the Asia Pacific that industry analyst Frost & Sullivan is warning of
tough times ahead for both traditional and IP telephony markets.
Flat revenues and declining equipment prices are forcing vendors
to focus on niche strengths, selected verticals, and platforms offering
communications, applications and service expertise to create a differentiation,
says Frost & Sullivan.
The company's newly minted Asia Pacific Enterprise Telephony
Market, report for Q2 2006, reveals that revenues across 14 major Asia-Pac
economies grew a meagre 0.1 percent sequentially taking the figure to US$611.9
million in Q2.
It's the second quarter on the run the enterprise telephony
market has recorded lackluster performance, says Frost & Sullivan which reflects
the intense competition amongst the top vendors.
"The top six vendors account for approximately 60 percent of
the market and are fiercely competing amongst themselves. IP (Internet
Protocol) telephony continues to replace traditional PBX (private branch
exchange) systems, but price pressures have diluted the additional revenues
expected of IP telephony, hence contributing to the overall tepid revenues,"
notes Frost & Sullivan senior research analyst Anoop Manghat.
Australia,
India, Thailand and the Philippines managed strong growth
in the quarter with the major vendors devouring the cream of the growth opportunities.
As expected PBX and KTS (key telephony systems) bore the
brunt of the slowdown with a 3.0 and 2.6 percent (respectively) dip in revenues
quarter-on-quarter. This slack was taken up by IP telephony (IP-PBX) segment which
registered a high growth of 6.5 percent in Q2 2006.
Driving that growth is the incredible pricing being achieved
in the market with IP telephony endpoints and digital handsets at near-equal
prices as part of the vendor push, says the analyst.
And while this trend seems certain to continue there are
clouds ahead for the IP telephony market also says Frost & Sullivan which
points out that the diverse regulatory environment across Asia Pacific
continues to restrain IP adoption, particularly in countries such as India and China.
"Intense competition in the market is reflected in the
downward pricing trends seen across customer segments in the region," says
Manghat. "Success in the marketplace will require the right pricing and
distribution model for the SMB (small and medium business) segment, while
moving away from mere box-pushing to up-sell service expertise and
vertical-specific applications."
Compounding the difficulty is the fact that "applications
such as unified communications are yet to generate the requisite customer
adoption" says the company.
With vendors, distributors, telcos and Internet service
providers (ISPs) all vying for the same customer dollar, vendors in the Asia
Pacific enterprise telephony market need to clearly articulate a strong
business case showcasing the benefits of moving onto an IP platform, explains Frost
& Sullivan.
Although cost savings may continue to be the principal
driver for migration to IP, garnering greater mind- and market share in the
long-run will require demonstrating the larger benefits of the platform such as
global connectivity, mobility, integrated communications, and customized
applications, says the report.
www.frost.com
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