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Frost & Sullivan has released its latest study of the world enterprise IP telephony endpoint market. Although the market is expected to be hurt by the current economic downturn, an increasing number of enterprises are recognizing the benefits granted by both IP desktop phones and enterprise soft clients.A telephone is no longer a standalone device, but a highly intelligent and integrated communications endpoint interoperable with enterprise hardware/software platforms, communication applications, and UC platforms. Today, largely due to declining prices and clear productivity benefits, IP desktop phones are rapidly proliferating in the enterprise, displacing their analog and digital predecessors.

Last year, we anticipated that PC soft phones offered a natural transition to more sophisticated UC clients; today, we can confirm that this new generation of soft clients is quickly penetrating the market, often replacing their old counterparts. Thanks to the strong case around UC and the continued shift from hardware-based to software-based solutions, more telephony vendors are aggressively pursuing bundling strategies--combining platforms, server software, advanced UC clients, and access to either a-la-carte or bundled applications. This has considerably boosted the penetration of enterprise soft clients such as PC desktop soft phones, advanced desktop UC clients, and mobile clients (FMC and UC).

The world enterprise IP desktop phone market continued to grow in 2008, generating $2.57 billion in total revenues, a 3.1 percent increase over 2007. Steady revenue decline is expected until the end of 2010, but the market is expected to gradually recover by 2011 and continue with a healthy growth pattern until at least 2015. Frost & Sullivan expects the overall CAGR to hit 9.1 percent between 2008 and 2015.

Enterprise soft clients have been relentlessly penetrating the market in the last two years. The world enterprise IP soft client market has more than doubled its size, from 1.0 million units shipped in 2007, to almost 2.4 million clients in 2008. This prominent increase in client shipments has been driven not so much by a swell of customer demand, but rather by the effective penetration strategies that many IP telephony providers have been implementing. As a result, Frost & Sullivan estimates that less than 45 percent of total enterprise soft clients shipped in 2008 are being used as a primary tool for voice communications.

Although PC desktop softphone revenues are expected to considerably decrease over time as UC offerings penetrate the market, the higher profit margins granted by advanced UC clients and mobile FMC/UC clients are expected to largely offset this revenue decline.

For more information, or to see the entire in-depth study, please visit frost.com or contact me directly (melanie.turek@frost.com).The world enterprise IP soft client market more than doubled its size, from 2007 to 2008.

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