Standalone VOIP Gateway Revenues Are on a Turbulent Ascent, IDC Says

FRAMINGHAM, MA — OCTOBER 10, 2000 — Standalone voice over IP (VOIP) gateway revenues are on a turbulent flight pattern. Although the market grew in 1999 and will continue to grow, it experienced a shakeout that has clearly defined the leading players in this space, according to IDC.

"The shakeout of 1999 has served to define this segment more consistently in terms of market share and leadership," said Tom Valovic, manager for IDC's IP Telephony research program. "A small group of vendors will continue to bump up against the remote-access server-based players and win sales in appropriate situations. Other vendors with less marketing muscle and technically upscale products will continue to sell into niche and Internet telephony service provider aftermarkets, and some will move away from the gateway hardware business."

Clarent is currently the leading vendor in this space. In 1999, its revenues skyrocketed 256%, landing the vendor in the market's top position with 25% of worldwide revenues. IDC attributes Clarent's success to its focused and aggressive market strategy and its penetration of European and Asia/Pacific incumbent markets.

IDC forecasts the worldwide market will surpass $2.1 billion in 2004. "Network expansion of pure-play Internet telephony service providers and new entrees to the market will drive much of the growth," Valovic said. IDC cautions, however, growth will slow in the 2001-2003 time frame. "Growth in the international toll bypass markets and changing product architectures for gateways, and increasing competition from RAS-based products will negatively impact the market's growth."

Throughout IDC's forecast, North America will represent the largest opportunity.

However, growth in Europe and the Asia/Pacific region will also offer vendors significant revenue potential.

"The overall simplicity and purpose-built features of VOIP gateways will make them increasingly attractive in countries with little existing infrastructure," Valovic said.

IDC recently published Standalone VOIP Gateways: Market Analysis (IDC #B22774). This report analyzes the market's 1999 performance, discusses emerging trends, and forecasts revenues and shipments through 2004. Vendors' 1999 market shares are also presented. To purchase the report, contact Bruce Atlas at 1-800-343-4952 extension 4053 or at batlas@idc.com.

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 www.idc.com.

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

# # #

All product and company names may be trademarks or registered trademarks of their respective holders.