North American Hosted IP Telephony Service Markets
Published By: Frost & Sullivan
February 2009
R1-6922
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Description
Integration with Other Business and Communication Applications is the Way Forward for the Hosted IP Telephony Market
The hosted IP telephony market will continue to be sluggish until it can shake off the effects of the economic slowdown and increasingly integrate with other UC applications (chat, presence, conferencing), business applications such as CRM and ERP, and is able to provide cost-efficient branch-office integration. Such integrations will not only benefit end users that are looking for a competitive edge, but also communication vendors and service providers that are hoping to increase market share and revenue. "Small businesses will continue to be attracted to hosted IP telephony offerings primarily for cost-efficient voice communications, although some of them will also choose a hosted offering for the ability to gain access to a complete UC package from a single provider," says the analyst of this research. "Medium and large businesses will also appreciate the economies provided by hosted IP telephony, but will seek such solutions mostly so they can focus on core business processes and gain access to applications and capabilities that they can test without making a capital investment."
While integration with other applications can help the hosted market plough ahead, significant technology enhancements to premise-based solutions and extensive PBX vendor channels present a considerable barrier to further market penetration. IP telephony vendors will have to develop astute channel strategies since most market participants are small, next-generation providers with limited geographic presence and service support capabilities and with no established customer base or brand-name recognition. Service providers should, therefore, seek to expand and diversify their channels and strengthen partner relationships.
Meanwhile, the low entry barriers are causing the North American hosted IP telephony market to remain extremely fragmented. The incumbent local exchange carriers (LECs) are reluctant to grab larger market shares due to fear of cannibalizing legacy service revenues and limited demand for next-gen hosted telephony services among their existing Centrex base. The competitive landscape is also likely to become increasingly diverse with competitive LECs (CLECs), software as a service (SaaS)/hosted application providers, value-added resellers (VARs) and system integrators (SIs) competing for a share of a slowly growing market. In such a scenario, channel support will determine each provider’s chances for success.
"In order to ensure both extensive customer reach and superior customer support, service providers need to develop stronger relationships with various VARs, SIs, and agents that may include traditional communication equipment resellers and integrators, but also real estate companies, IT consultants, and moving companies," notes the analyst. "Further, providers should seek to develop an eco-system of partnerships to jointly enhance market awareness and be able to offer customers a range of interoperable solutions and capabilities." Telephony providers should cooperate with hosted contact center, email, customer relationship management, Web 2.0 and other communication and business application providers.
Service providers may adopt diverse business strategies; for instance, some may focus on businesses seeking inexpensive voice communication packages, while others may choose to target businesses that seek advanced communication solutions such as UC, where application integration provides considerable productivity benefits. Providers could also take advantage of merger and acquisition opportunities based on complementary technologies, expertise or channels, since consolidation can help improve customer awareness, margins and the value proposition of hosted IP telephony.
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Table of Contents
- 1. Introduction
- 1.1. Executive Summary
- 1.2. Industry Segmentation
- 1.3. Market Definitions
- 1.4. Research Scope
- 2. Market Overview
- 2.1. Hosted IP Telephony Value Proposition Evolution
- 2.2 Telephony in the Unified Communications Framework
- 2.3. Telephony in the Unified Communications Market Stack
- 2.4. The Virtual Workplace: Factors Driving UC
- 2.5. Market Overview
- 2.6. Market Growth Highlights
- 2.7. Industry Challenges
- 3. Market and Technology Trends
- 3.1. Key Macro Market Trends
- 3.2. Key Hosted IP Telephony Trends
- 3.3. Hosted IP Telephony Market Evolution
- 3.4. Communications Market Outlook
- 4. Competitive Analysis
- 4.1. Competitive Structure
- 4.2. Competitive Analysis
- 4.3. Service Provider Profiles
- 4.4. Service Provider Market Positioning
- 5. Total Hosted IP Telephony Service Market
- 5.1. Market Growth Highlights
- 5.2. Line and Revenue Forecasts
- 5.3. Percentage of Lines by Country
- 5.4. Percentage of Lines by Size of Implementation
- 5.5. Forecast Assumptions and Factors
- 5.6. Demand Analysis
- 5.7. Addressable Opportunity
- 5.8. Pricing Trends
- 5.9. Market Drivers
- 5.10. Market Restraints
- 6. Conclusion
- 6.1. Strategies and Recommendations
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