Blog Post

The Real Truth About VoIP Sales

VoIP service revenues will grow from $1.3 billion in 2004 to $19.9 billion in 2009, Infonetics Research’s latest report, VoIP Services annual market size and forecast for North America. That’s less than 1% of the total Voice revenues in the US. So much for getting excited about VoIP in 2004. Now a few weeks ago, we had a report that said there are 1100 VoIP service providers world wide, of which about 500 are in the US. That means each one of those is doing about $2 million in sales. That’s normalized for the entire group. back out the top three – Vonage, Cablevision and Time Warner, and factor in that of the total half of it came from Managed IP PBX services, well the residential market was much smaller than many though it was. In other words, all the other pretenders in the VoIP races, well they’re doing bupkiss in sales. Anyway Infonetics report says that as major carriers migrate to IP the VoIP revenues are going to shoot up. Kevin Mitchell, directing analyst for Infonetics and author of the report points out that the forecast “also assumes that revenue growth is due to incremental revenue from add-on VoIP applications, such as conferencing, remote office integration, presence/location-based services, and collaboration.” Nevertheless, some interesting highlights:

  • The number of residential/SOHO VoIP subscribers in North America is forecast to climb from 1.1 million in 2004 to 20.8 million in 2008
  • Managed IP PBX services, an earlier arrival than hosted offerings and aimed at medium and large organizations, make up just over half of the market in 2004
  • Business hosted VoIP service revenue will exceed that of managed IP PBX services by 2006, as thousands of small and medium businesses adopt hosted offerings.

7 Responses to “The Real Truth About VoIP Sales”

  1. Chuck

    For what it’s worth, it would look to me that Xten is doing better than your poposed average as just a softphone builder. Xten builds softphones and SDKs, they have 35 people and by the looks of their financials should be cash-flow positive this quarter [approx $4M for the year] which just ended. FYI, they just signed Yahoo!, also in their financials.

  2. i guess, that’s one way of looking at it…. but i think this is all quite based on best case guess scenario and well we can’t take it that seriously, except as an indicator of general direction of the market place

  3. Jesse Kopelman

    What I want to know is how they can forecast service revenue? Aren’t both MOUs and cost per MOU things highly subject to change? Does anyone beleive in such studies other than those trying to get money for their VoIP compnay?

  4. Daryl

    The trend has been away from hosted IP Centrex to IP/VoIP trunking. Look at Covad and Level 3.

    I Cbeyond is a good example of IP trunking service.

    From what I have seen, most analyst firms lump IP trunking and IP Centrex into the common category of hosted IP services.

  5. lickedcat

    Om, what is the definition of business “hosted” IP services. Is this IP Centrex, such as a S.P. hosting centrex features off their centralized softswitch?

    Do you see a market in IP/VoIP trunking, where a business gets their own IP PBX and they just need a S.P. to terminate their LD and VOIP calls?