IDC Says Market For IP Telephony Will Weather The Telecom Storm

FRAMINGHAM, MA – JANUARY 29, 2003 – It's been a tough year for telecom vendors and carriers as capital expenditures have been slashed and network builds have been scaled back. But a new report from IDC takes a fresh look at the overall market for IP telephony and sees positive signs both on the enterprise and service provider side. According to IDC’s Worldwide IP Telephony Equipment Forecast 2002-2007, the long-term prospects for voice-over-packet technology remain excellent despite the telecom downturn.


"The overall market is projected to increase at a compound annual growth rate of 45% to reach a revenue base of $15.1 billion by the year 2007," noted Tom Valovic, director of IDC's IP Telephony program. IDC is projecting the best growth in enterprise systems such as IP-PBXs. For this year, the current forecast shows a 66% increase in equipment sales to enterprises.




2001 2002 2003 2004 2005 2006 2007

Total 1846 2398 3336 4945 7592 11,356 15,142

Growth NA 30% 39% 48% 54% 50% 33%

In terms of enterprise solutions, IDC believes that 2003 will present a major window of opportunity for both IP-PBX vendors and carriers looking to roll out IP Centrex and VoIP VPN services. A number of carriers such as Verizon, SBC, and WorldCom have already made key announcements in 2002. This is where softswitch experience in other areas can have direct application, although organizational barriers will pose knowledge transfer challenges for many carriers.

The report also warns that large telecom suppliers might be tempted to forestall a stronger commitment to next-generation technology to optimize revenue from their existing legacy product base. While the IDC report notes that this may appear to be a good short-term strategy, it is not one without serious long-term implications. "The danger here is fairly obvious: R&D and technology development can fall behind along with the design, test, and installation experience needed to provide a strong transitional capability for traditional customers" notes Valovic.

IDC’s recently released study, Worldwide IP Telephony Equipment Forecast 2002-2007 (IDC #28660) covers softswitches and four media gateway segments: carrier gateway switches, RAS-based gateway switches, standalone VoIP gateways, and voice-over-broadband gateways. The enterprise segments include both IP PBXs and IP phones. The study presents the cumulative forecast, discusses recent trends in the individual segments, and provides essential guidance for equipment vendors and service providers trying to keep their core markets viable in the current telecom winter.

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

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC’s customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world’s leading IT media, research, and exposition company.


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