Top Stories of 2009: It's the economy stupid!

With the 2009 economy almost in the can, there has been much debate about what that means for VoIP. The nature of our industry gives it both pros and cons in times of financial cut backs and companies looking to save a dime. VoIP upgrades often mean expensive equipment purchases and buildouts but also long term cost savings and increased efficiency.

Way back in January, we picked up a Voxilla story that examined this very dichotomy. Don Witt of cyLogistic thought that competition between businesses would push them to cut costs, and the easy way to cut costs is (in theory) to go to VoIP. Witt thought the VoIP growth curve had been "pulled down" by 6 to 12 months or more, and VoIP sales may increase 2 or 3 times more than previous forecasts predicted, with next year's VoIP growth jumping from 4 percent, to 8 or 12 percent. Voxilla harpooned his theories noting that there's a large up-front cost of making the move to VoIP, either by buying (i.e. capital expense) new hardware or contracting for a hosted service, plus the costs of training the existing workforce to use a new phone system. Read more in Bad economy good for VoIP theory harpooned.

In February, InStat posted a report of doom and gloom. However, a promising report came out in April that gave some promise to the theory that there would be more VoIP spending. Chief information officers (CIOs) across the U.S. said VoIP was among the top five areas of IT investment would invest in over the next 12 months. Of the more than 1,400 CIOs interviewed, VoIP came in 4th on the list of IT investments with 26 percent of respondents saying they were going to go spend money to save on monthly phone bills and get on the unified messaging bandwagon.

Well now the year is over, so how did we do?

The carrier IP telephony market got hammered in the first quarter with revenues down about 25 percent compared to Q1 2008, according to a report by analyst firm Dell'Oro Group. The report attributed the decline to a mix of seasonal weakness, the global recession and resulting cap ex pullbacks, and wireless substitution. Carrier IP telephony market down 25% in Q1

For the second quarter an Infonetics research report on carrier VoIP spending revealed some signs of life for the industry, which had been battered due to reduced carrier capex amid the recession. Global carrier VoIP equipment revenues totaled $598 million in Q2, and while the market segment revenues were off 32 percent year-over-year, they did show slight improvement of 0.8 percent from Q1. Voice application servers, media gateways and Class 5 softswitches were the strongest equipment categories for the quarter, while EMEA and North America showed the best regional sales performance. The report identified AudioCodes, Cisco, MetaSwitch, Sonus, Alca-Lu, Italtel, Broadsoft, and Nortel as the vendors that had strong revenue increases for the quarter.

According to a recent Infonetics report the worldwide service provider Voice over IP equipment revenue totaled $595 million in Q3 09, which was only a slight decline from the Q2. Q3 2009 saw the VoIP equipment market holding pretty strong as the report claims that the economic downturn spurred service providers to migrate to IP communications. Some interesting things to note were Cisco and Alcatel-Lucent posting double-digit percent increases in their media gateway revenue for Q3 and Nokia Siemens Networks posting 100 percent growth in softswitch sales for the same quarter.

With these reports it would appear that parts of our industry anyway--while below previous years--aren't getting any worse. In fact the thing that is keeping companies going is the promising fact that businesses are spending money on VoIP equipment.