Growth Predicted for Hosted VoIP Despite Economic Woes

In spite of stormy economic seas, new analysis says smooth sailing and sunny skies await the VoIP community.

Evolving business trends, financial necessity, and savvy marketing by the major carriers all will give IP telephony a boost, according to a new Frost & Sullivan report, North American Hosted IP Telephony and VoIP Access Service Markets.

North American hosted IP telephony and VoIP access service markets will likely see the number of users increase from 860,000 in 2007 to nearly 4 million in 2013, said Frost & Sullivan Program Manager Imran Khan.

Bold words, at a time when businesses are tightening belts and keeping tech initiatives in check. But Khan said it is just that atmosphere of fiscal prudence that will drive continued adoption of IP telephony and SIP trunking services.

Consider a smallish business of, say, 500 employees. When that enterprise faces the possibility either continuing to maintain and upgrade its existing traditional PBX, or else to replace the box, there will be hand-wringing.

A third option becomes suddenly appealing. With money tight, business owners may be ready to step out of their comfort zone, to look a more affordable, IP-based solution.

This becomes doubly true when one takes into account the increasing breadth of hosting services being offered by the major carriers (not to mention other providers). “If you can spend a few thousand dollars on handsets and get a hosted solution from Verizon or whoever, without having that strain on your IT staff, that is very appealing,” Khan said.

Khan predicts the service offerings among the carriers will be a major catalyst in moving businesses toward the IP telephony universe, a strong complement to the inherent desire to save money.

In offering to manage an IP based system, carriers like Verizon and AT&T offer smaller businesses a way to ease into VoIP without taking on a major IT investment or financial commitment. With the price of a startup fee and a few handsets at $200 apiece, a business can be off to the races for under $5,000—far less than the cost of the typical IP PBX, with its ongoing upgrades through future years.

“The service providers are playing it really smart,” Khan said.

That soft landing is a significant enticement, since not just price tag but also a measure of technophobia may be keeping business owners from embracing VoIP. “There also has been a tremendous amount of apprehension in past when it comes to new telecommunications,” Khan said. “There is always this sense of, I don’t want to face any uncertainty.” Carriers’ willingness to shoulder the service burden can lessen such concerns.

The big carriers ease that fear not only by delivering service packages, but also by bringing the weight of their reputations to the table. “Companies like Verizon and AT&T are cashing in on their brand equity. No one out there is saying: ‘I don’t know if Verizon is still going to be in business or not.’ ” Most feel that a service deal with such players is bound to be a safe bet.

For those in the VoIP community hoping to reap the rewards of the predicted upsurge, Khan recommends a strategy of basic block and tackle, augmented by a close hand-holding amongst one’s customers.

“People still want the reliability, they still want the availability, they still want quick trouble resolution. All those factors have to be there,” he said. Beyond these, though, VoIP newcomers want to feel protected: They want managed services to safeguard their positions.

These services “are something that did not exist 10 years ago, but now the service providers do have those capabilities and people are very interested in that. They are going to want to see things like the ability to remotely monitor and diagnose network problems. They want to feel that those things are just going to be taken care of.”

Editor’s Note: See our series Healthy VoIP Nets for in-depth looks at—so far—30 such monitoring and diagnostic systems.

If a slow economy could help encourage VoIP investing, there is a flip side, Khan said. Let the economy get too much slower, especially in industries where branch offices are the norm, and predictions could go sour.

“You could see people procrastinating, and taking their time to do it. They may stop and think two or three times before going out and making any decisions,” he said. Even then, those decisions make not break in favor of new technologies. “If hundreds of thousands of real estate workers go out of work, along with the brokers, you definitely will see some slow-down in growth.”

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