IDC Report Says VOIP Has Potential to Radically Change the Telecommunications Industry

FRAMINGHAM, Mass., March 11, 1999 — A new report from International Data Corporation (IDC) states that voice-over-IP (VOIP) represents a pivotal technology. However, IDC cautions, in order for VOIP technology to succeed, it will need to overcome a number of obstacles.

"We define a pivotal technology as one that is large enough in scope and promise to have the capacity to redefine the industry," said Tom Valovic, a research manager with IDC's IP Telephony program. "The really interesting thing about VOIP is its potential to redefine not only the data communications industry but telecommunications as well."

According to IDC, an exciting prospect now lies before the communications industry: to create an open, programmable public switched telephone network (PSTN). VOIP is a major driver of this phenomenon. "The challenge will be for vendors and service providers to import the open model of PC applications development into the larger conceptual framework of the PSTN. If this transformation is successful, it will herald an exciting new era of applications growth by enabling more competitive pricing among various types of service providers ? and perhaps even changing pricing models ? hastening the advent of innovative new service offerings and allowing even more expansion of entrepreneurial activity," Valovic said.

However, IDC cautions that VOIP is still very much a trial balloon, and a number of major obstacles are standing in the way of VOIP services' success. For example, interoperability is a major challenge that VOIP will have to overcome. Right now, there are many proposed standards but no clear direction for the technology. The danger is that the VOIP gateway market could become bogged down in standards conflicts, which would hamper growth and development efforts. Despite the obstacles, IDC's five-year forecast for worldwide VOIP gateway revenues shows substantial near-term and respectable long-term growth. In 1999, the market is expected to reach $290 million, up from $130 million in 1998. By 2003, IDC believes the total worldwide market will exceed $1.8 billion.

IDC's report titled VOIP Gateways for Service Providers: Market Review and Forecast (IDC #B18324) discusses conditions in the VOIP gateway market. It examines market drivers and inhibitors and presents gateway revenue and port shipment forecasts through 2003. Additionally, it looks at the type of vendors competing in this market. To order a copy of the report, contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com. Additional information on IDC can be found on its Web site at http://www.idc.com.

About IDC International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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