Enterprise Adoption of Hosted IP Voice Leads VOIP Revolution, IDC Says

FRAMINGHAM, MA – September 27, 2004 – After years of hype, VOIP has made the shift from an emerging technology to a viable business solution. Although the consumer market has attracted the most attention from the press, VOIP is gaining accelerated business adoption. The market for hosted IP voice services among US businesses is expected to reach nearly $60 million by the end of 2004. IDC projects a compound annual growth rate of 282% to reach $7.6 billion in 2008.

The fastest growing VOIP market is hosted IP voice services for business customers. Hosted IP voice services are fundamentally different from PBXes because capital expenditure is avoided, maintenance contracts are unnecessary, and management is fully outsourced to a secure, central location. In addition, the customer is assured of instant access to the latest upgrades in both hardware and software.

"With all of the market conditions in alignment, VOIP is finally poised to overtake and replace the aging but reliable circuit switched infrastructure. Much of the recent excitement over VOIP has focused upon relatively minor deployments to the consumer market, " says William Stofega, senior research analyst, VOIP Services. "While not down playing the potential of the consumer, IDC believes that the business market is ripe for adoption of VOIP and the features and functionalities that it promises. Hoping to avoid the savage price wars that have decimated other business services as well as fight off losses to IP PBX vendors, carriers are beginning to offer a hosted IP services to business customers."

Given the dynamics of the current market for telecommunications services, combined with the advantages embedded in a hosted solution, IDC believes that the opportunity for service providers is theirs to own. In the past, business customers have quickly rejected products that do not replicate their legacy experience.

This study, U.S. Hosted IP Voice Services 2004-2008 Forecast: VoIP Invades the Enterprise (IDC #31825), presents IDC's forecast of the business hosted IP voice services market. Hosted IP voice services include a complete array of PBX-like business telephony features including an auto attendant, 4-digit extension dialing, 3-way conferencing, conference bridge, multiple call handling, business class voice mail, and hunt groups. Hosted voice services also deliver applications and enhanced features such as unified messaging, contact center, web services, remote services/mobility, self-service management, presence, and instant messaging.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

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