Cisco Systems has ascended to the top competitive step of the North American enterprise communications market less than a decade after its Selsius Systems acquisition. During the past year, Cisco has shot by long-time market leader Avaya for PBX market supremacy. Cisco is also the market leader for total CPE shipments (PBX and KTS/Hybrid line station shipments, combined), although Avaya and Nortel are close behind (see Figure 1).
Cisco’s rapid ascension signifies a changing of the guard few would have predicted at the beginning of the millennium. Cisco, though, should not be too complacent in their current position, because another competitor – Microsoft – is biding its time on the sidelines with the potential to challenge them in a few years, while another – Google – remains in the shadows posturing and planning. Interesting times are ahead for a market space not very long ago viewed as dull and stable.
Figure 2: Enterprise Communications Market Overview
Market demand for PBXs was relatively strong during 2007. System shipments were an estimated 50,000 units, accounting for 9.35 million line stations, a 6.5% annual increase (based on revised data estimates cited in my BCR January 2007 market review article). Line stations behind new system shipments accounted for about 60% of the total; the remainder were add-ons to installed systems.
Core PBX system revenues (including all common equipment, software, voice terminals and installation fees; excluding all support services and peripheral application options) increased almost 6% to about $6 billion. The smaller line size KTS/Hybrid market was not as strong: about 300,000 systems accounting for an estimated 4.5 million line stations, a 3.4% increase from 2006 (based on revised data estimates cited in my BCR January 2007 market review article). Core KTS/Hybrid system market revenues (including all common equipment, software, voice terminals and installation fees; excluding all support services and peripheral application options) increased about 2.4% to about $2.75 billion.
IP telephony market growth remained strong through 2007. Slightly more than two thirds of total PBX line station shipments were IP endpoints, 6.25 million line stations (up from 5.1 million in 2006). TDM line shipments (analog and digital) made up the remaining 3.1 million lines, and continue to decline more than 15% annually (see Figure 3).