Eric Krapf
Eric Krapf is General Manager and Program Co-Chair for Enterprise Connect, the leading conference/exhibition and online events brand in the...
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Eric Krapf | August 16, 2011 |


IP Phones: Going Strong, Not "Going Away"

IP Phones: Going Strong, Not "Going Away"
When are the vendors going to stop making IP phones? When companies stop buying them.

When are the vendors going to stop making IP phones? When companies stop buying them.

It's always been a straw man to talk about technologies or products "going away," or even "going away any time soon," as it's sometimes amended for weasel-word purposes. But when it comes to desk phones, "going away" is actually the opposite of what's happening today.

Representatives of three different vendor companies have said privately, in the last couple of months, that their latest quarters were their best ever for IP phone sales. In spite of all the all the predictions about users cutting the cord and companies being unwilling to invest in desk phones, there is absolutely no hard evidence to support the idea that enterprises are systematically moving away from desk phones--at this point.

In a way, this is not surprising and shouldn't even seem counter-intuitive. The IP-PBX market has been on the rebound; more lines being deployed means more devices connected to those lines. And as much as vendors talk about mobility strategies, single-number reach, and softphones, there's still no consensus replacement for the IP phone in enterprises today, leaving desk phones as the default choice when you have to put in an IP-PBX today.

No company has more at stake in the IP phone market than Cisco. For one thing, every phone Cisco has ever sold is an IP phone, so its installed base, replacement market and new sales are all IP phones. And in the past year, Cisco has regained its status as the clear market leader (see the PBX market piece linked above), which means that as long as there's no broadly accepted and demanded alternative to desk phones in IP-PBX installations, Cisco will continue to have the biggest stake in the IP phone market continuing.

With that in mind, last week, I talked with Tom Puorro, senior director of product management at Cisco, whose bailiwick includes the entire IP telephony portfolio, from the core UC Manager IP-PBX platform out to the phones, as well as the new Cius enterprise tablet. Interestingly, Tom said the one part of the portfolio he doesn't oversee is the softphones.

To begin with, Tom Puorro confirmed that these are the best of times for Cisco's IP phone portfolio, whose sales he said are "continuing to expand at a rapid pace."

"We had the best year ever in IP phone sales," he said of the Cisco fiscal year that just concluded. He said that when he talks to people who doubt IP phones' staying power, "Their question is, When are you going to stop making IP phones, and my answer is, when people stop buying them."

He's bullish about growth in IP phones because "Enterprises continue to expand their installed base" of IP telephony, and are even approaching replacement cycles for their earliest implementations from nearly a decade ago. But the place he's really optimistic about is the mid-market.

There's a lot of potential buyers on the market" in the 50-1,000-seat segment, Puorro said. "That market for Cisco is exploding."

The installed base in this part of the market is turning over in significant numbers, Puorro said. "There was a huge amount of analog-class digital handsets [i.e., basic phones] deployed," he said. Companies are seeing a path to IP migrations because "Cost has come down, complexity has come down, you don’t need a super-duper engineer to deploy these" IP phones.

In keeping with Cisco's focus on video, Puorro is even planning to push video phones into the mid-market; he said Cisco's 8941 and 8945 model video phones are delivering "very good video experience" at a street price of roughly $200 per phone. Granted, not every mid-size company cares "if the accountant sees the other accountant," but the overall strategy fits with the Cisco prime directive of driving heavier traffic over data networks to promote switch and router upgrades. (Though in my conversations at Enterprise Connect, this is exactly the kind of trend that worries a lot of network manaagers who fear video's impact on networks that may not be ready for it).

With or without video, Cisco--not traditionally your idea of the low-cost provider--intends to make a strong case on price, Puorro said. After discounts, mid-size enterprises will be able to get a standard IP phone with voice mail box, softphone, call control, and licensing, for less than $100, he said.

"That’s how serious we are about the mid-market."


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