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North American market demand for enterprise communications systems rebounded by almost 10% during the second quarter, after a very rough first quarter. But total line station shipments for the first half of this year were down about 25% on a year-over-year basis; H1 2009 shipments are estimated at 5.5 million.

Retaining its position as the market leader is Cisco Systems with an estimated market share of 20.9%. Avaya is a strong runner-up with an estimated 15.4% share of the market. Nortel, surprisingly, had a strong second quarter despite the specter of bankruptcy, and managed an estimated 11.5% market share. Rounding out the top five suppliers are NEC (8.3%) and Mitel (8.2%). It is interesting to speculate that should Avaya be successful in its bid for Nortel's Enterprise Solutions (ES) business unit it would likely leap ahead of Cisco when the shipment totals for the two product portfolios are combined, for at least the first year of the merger. This would give Cisco incentive to try harder to recapture its lost leadership position.

The leading five suppliers collectively captured just under two thirds of the total market. As impressive as this sounds, the total for the same five suppliers declined from about 70% for full year 2008 estimates, indicating increased strength from the rest of the pack. The remaining system suppliers are difficult to count, because it seems that a new one appears to pop up almost every month. It is most difficult to track the growing number of entrepreneurs repackaging open source software to small system customers. Of the system suppliers using open source software--excluding Digium, the developer of Asterisk--each has market shares of 1% or less (and most are less), but their collective shares add up to maybe 10% of the total.

The second tier of market share leaders includes seven system suppliers with estimated market shares within the 2%-3% range: Digium, Toshiba, Panasonic Communications, ShoreTel, Siemens Enterprise Communications and Vertical Communications. Digium's shipment totals include its packaged offerings, Asterisk Business Edition and Switchvox, and excludes Asterisk downloads only. Toshiba, Panasonic, and Vertical are leading suppliers of what are now known as Small Medium Business (SMB) systems, what I used to call Key/Hybrid Systems (KTSs); the former two suppliers are also leading global competitors, while the latter is primarily a North American player. The offerings of ShoreTel and Siemens are primarily targeted at larger enterprise customers. In a study in contrasts, most of ShoreTel's shipments are in North America while most of Siemens' are outside North America.

Cisco's seemingly never-ending record of market growth appears to have leveled off this past year, something to be expected when they reach the top of the competitive ladder. It is difficult to know if the economy has played an important role or whether Cisco is finally at equilibrium with the rest of the competitive field, including old and new market players.

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