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Allan Sulkin
Allan Sulkin, president and founder of TEQConsult Group (1986), is widely recognized as the industry's foremost enterprise communications market/product analyst....
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Allan Sulkin | May 17, 2010 |

 
   

Cisco versus Avaya: A Very Close Battle for CPE Market Leadership

Cisco versus Avaya: A Very Close Battle for CPE Market Leadership The fact that Avaya did not strongly sweep past Cisco in the market share race is attributable to the continuing decline of Nortel product shipments, especially in the large line size market.

The fact that Avaya did not strongly sweep past Cisco in the market share race is attributable to the continuing decline of Nortel product shipments, especially in the large line size market.

Some of the shipment data results are in for the first quarter of this calendar year and it appears that the ongoing battle between Cisco Systems and Avaya for enterprise communications system market share leadership, based on line station shipments, is shaping up to be a very close race.It is estimated that the two system suppliers will collectively control half of the North American market and one third of the global market. The shipment totals for each of the system suppliers in the North American and global markets are very close. Based on TEQConsult Group analysis of the reported shipment data it appears that Cisco (713,000 lines) will edge out Avaya (687,000 lines) in the North American market by about a single market share point, while Avaya (1.67 million lines) can lay claim to global market leadership over Cisco (1.63 million lines) by a fraction of a market share point. Cisco and Avaya will each have more than double the market share than the next leading supplier (NEC) in North America and be more than several market share points ahead of their closest competitors (Siemens and Alcatel-Lucent) for global shipments.

It should be pointed out that there are differences in the reporting structure used by each of the two leading system suppliers that can lead to different interpretations of the reported data. For example, Cisco reports IP endpoint unit shipments, not line station shipments, and a sizable percent (22%) are classified as softphones. Since most Cisco softphones are not self-standing units, but are often complementary to an associated desktop instrument, the problem of double counting exists when attempting to estimate line station shipments. Different analyses of softphone shipment totals would result in different line station shipment estimates (and different market share estimates).

The possibility also exists that Cisco line station shipments can be be underestimated if the number of softphones installed as standalone units turns out to be higher than assumed. A similar situation, on a smaller scale, exists with Cisco reporting of wireless phone endpoints. Taking this and other data interpretation factors into account, it may be best to label Cisco and Avaya as co-market leaders at the present time without giving one the edge over the other. As they sometimes say during election night coverage, it's too close to call.

Cisco last year had an estimated North American market share of 24%, with Avaya estimated at 17%. Avaya last quarter was able to bridge the gap based on its acquisition of Nortel Enterprise Solutions late last year. The fact that Avaya did not strongly sweep past Cisco in the market share race is attributable to the continuing decline of Nortel product shipments, especially in the large line size market. There is no indication that the trend won't continue and accelerate, a handicap Avaya must overcome if it is to overtake Cisco by year's end for the market leader position. A troubling reporting statistic from Avaya this past quarter was that North American line shipments declined on a quarterly and yearly basis, despite an upturn in the market. Cisco shipments increased in each instance.The fact that Avaya did not strongly sweep past Cisco in the market share race is attributable to the continuing decline of Nortel product shipments, especially in the large line size market.



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