Study: VoIP Fuels Enterprise Equipment Spending

Enterprise hardware spending has rebounded thanks in large part to computer-telephony integration.

A study released Thursday by the Telecommunications Industry Association (TIA) shows that after lackluster years earlier this decade, 2004 and 2005 showed sharp increases in corporate spending on new communications tools.

Total revenue from spending on enterprise equipment reached $98.3 billion in 2005, an increase of 6.9 percent over 2004, and is expected to climb to $104.5 billion in 2006.

Matt Flanigan, president of the TIA, told that computer-telephony integration (CTI) was the fastest-growing component of the enterprise market in 2005 with a 10.5 percent increase to $5.7 billion.

Videoconferencing equipment, which rose 10 percent to $825 million, came in a close second.

Flanigan said that companies are choosing solutions like VoIP and video conferencing in order to maintain a competitive advantage over their rivals.

“IP technology has caught on so well and is so much more efficient for companies to sign onto because it gives them advantages the old technologies do not have. They need this to remain leaders in their respective fields,” he said.

Flanigan said that as older PBXs come off line, most are being replaced by IP-PBXs.

Spending on CTI equipment will continue to grow through 2009, said Flanigan, who expects a six percent growth rate in this sector this year.

In 2000-03, equipment was relatively new, lessening the demand to replace or upgrade.

According to the study, equipment purchased in the 1998-1999 timeframe had begun to age by 2004, leases were expiring, the economy had improved and enterprises were once again looking to upgrade their existing infrastructure.

As legacy equipment ages, replacement demand, along with rapid growth in videoconferencing and unified communications, will continue to fuel spending.

The TIA expects spending on enterprise equipment to reach $121.7 billion by 2009, a 5.5 percent compound annual growth rate.

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