There is always another view of the UC/IPT market. It depends on how you count market share. In Alan Sulkin's article, "Cisco the Big Winner in 2008 CPE Market Share Race," you learn that Cisco outsells Avaya in CPE numbers. This is not the number of systems or lines or revenue.But let's look at those numbers. Cisco customers have to replace their digital phones with Cisco CPE, while Avaya, Alcatel, Siemens, Nortel and NEC customers can retain their digital phones and can avoid the cost of new IP phones. Eventually the digital phones will disappear, but not as fast as occurs with Cisco implementations. The Cisco CPE sales do not reflect the system or line sales.
My friend Doug Green, the publisher of Telecom Reseller and other papers, sent an e-mail with the worldwide market results as tabulated by Dell'Oro. Avaya is dominant worldwide, not Cisco, although it is by a small margin. The Dell'Oro numbers count lines, not CPE devices. This leads me to conclude that in some market descriptions, Avaya is underrated and presumed to be losing against Cisco. Avaya seems to holding onto their market better than publicly expected. Doug's comments on the market follow.
Down But Not Out The global UC market declined in the fourth quarter. True to form, as telephony has always tracked GDP, the market slipped 8%, which is about what most major developed economies did over the same period. UC tracks GDP because we are so very closely related to the rate of business formation, and enterprise "moves, adds and changes." The market has historically tracked GDP within a range of a few points. Line shipments could shrink by 7% this year, with revenues falling even more due to discounting. In Q3 and Q4 some recovery is expected. The market in Q4 2009 should beat its 2008 Q4 performance.
For the first time, sales of IP-PBX lines declined year over year in 2008. Companies may have postponed migrating remote sites and smaller companies may have put off buying new gear. However, many analysts are looking for a slight recovery in Q3 and Q4. Look for capital budgets to come unstuck as the economy (and credit markets) thaw. Are you positioned to match that demand when it comes on line?
A significant development is the continuing shift to revenue for either software or services as opposed to pure equipment sales. More and more of the key vendors and their partners are expanding their offerings in revenue by selling enhanced services and improvements, in place of selling more equipment. Being able to offer immediate cost savings, for example, is the new ROI. You will note Microsoft now taking its place among the largest vendors in the market.
The Horse Race: Avaya and Cisco Nose to Nose Global Share of Revenue for Total Enterprise Telephony Q4 2008
Avaya: 15.5% Cisco: 15.3% Siemens: 10.8% Alcatel-Lucent: 10.3% Nortel: 9.3% NEC 6.5% Aastra 5.0% Mitel: 2.6% Microsoft: 2.2% Others: 22.5%
Source Dell'Oro Reports
The top eight vendors account for 70% of all lines shipped and 79% of the revenue.
Avaya and Nortel retained market share in 2008, while Cisco, Aastra and Microsoft gained share. In keeping with a long-term pattern, the market remains very competitive, with no company having even a fifth of the revenue pie. It should be noted that many vendors are dominant in specialized fields such as health care or hospitality, so that many of the vendors with smaller shares overall have large market shares within select verticals.
For the first time, sales of IP-PBX lines declined year over year in 2008. Companies may have postponed migrating remote sites and smaller companies may have put off buying new gear. However, many analysts are looking for a slight recovery in Q3 and Q4. Look for capital budgets to come unstuck as the economy (and credit markets) thaw. Are you positioned to match that demand when it comes on line?
A significant development is the continuing shift to revenue for either software or services as opposed to pure equipment sales. More and more of the key vendors and their partners are expanding their offerings in revenue by selling enhanced services and improvements, in place of selling more equipment. Being able to offer immediate cost savings, for example, is the new ROI. You will note Microsoft now taking its place among the largest vendors in the market.
The Horse Race: Avaya and Cisco Nose to Nose Global Share of Revenue for Total Enterprise Telephony Q4 2008
Avaya: 15.5% Cisco: 15.3% Siemens: 10.8% Alcatel-Lucent: 10.3% Nortel: 9.3% NEC 6.5% Aastra 5.0% Mitel: 2.6% Microsoft: 2.2% Others: 22.5%
Source Dell'Oro Reports
The top eight vendors account for 70% of all lines shipped and 79% of the revenue.
Avaya and Nortel retained market share in 2008, while Cisco, Aastra and Microsoft gained share. In keeping with a long-term pattern, the market remains very competitive, with no company having even a fifth of the revenue pie. It should be noted that many vendors are dominant in specialized fields such as health care or hospitality, so that many of the vendors with smaller shares overall have large market shares within select verticals.
What I found interesting is the rise of Aastra and Microsoft. Aastra moved up through acquisitions. Microsoft went from 0.7% to 2.2% market share through OCS sales. Microsoft is now on the radar and will only be reducing the market shares of the companies above them on the list.
Always question the market distribution numbers, even the ones I quoted here. How you count market share may be valid for one perception and skewed for another. Keep in mind that vendors will report their numbers in the most favorable way. The North American market shares will be different than the international market shares where Alcatel and Siemens are still major players.
