Steve Hilton

IP telephony and unified communications: two great tastes that taste great together. These topics are near and dear to our hearts as we enter 2008. IP communications and SMB adoption are our topics this month in Ask Steve.

Who are the leading vendors of VoIP to SMBs by market penetration? (Ed from New York, N.Y.)

No single vendor owns the VoIP and IP PBX space today. While the major telcos (i.e. AT&T, Verizon, Qwest) have been watching the hosted VoIP market slide away from them, the premises-based vendors have been cobbling together as much market share as they can.

Based on Yankee Group’s 2007 SMB IP Communications Survey, U.S.-based market shares for businesses with 100-499 employees is fairly fragmented. Cisco and Linksys hold the #1 spot with 29% of the market. Avaya has 11% and a mish-mash of other companies has 7% share. Microsoft, Nortel and Opensource solutions share the #4 spot at 5% market share each. See Exhibit 1.

We anticipate Cisco will increase share over the next 12-24 months as it continues its relentless push into the SMB space with new products and enhancements to its SMB Select channel program. We also believe D-Link/Microsoft will increase share with the new Response Point solution (currently available through D-Link and Quanta, Aastra sometime this year).

What unified communications solutions are being bought by small businesses? (Bruce from Tupelo, Miss.)

Great question, Bruce. Unified communications (UC) applications are often linked to VoIP purchase decision. According to Yankee Group data, as an SMB decision-maker gets further into the VoIP decision-making process, his interest in a variety of UC applications increases. For example, while an SMB is evaluating vendors for VoIP solution, its interest in speech recognition applications is 15%. After going through a VoIP testing phase and allocating budget for purchase and implementation, an SMB’s interest in speech recognition applications is 36%. Another example – 24% of SMBs have interest in softphones during the vendor evaluation phase, but 54% have interest once budget is allocated for VoIP.

Once an SMB purchases a VoIP solution, actual adoption of UC applications lags their pre-purchase intentions. Why? Generally SMBs don’t have the resources to implement all the UC applications they intended. In addition, neither channel partner nor internal SMB IT staff has the time or financial motivation to train SMB employees in use of the UC applications. As such, adoption of the UC applications lags. That being said, actual adoption of UC varies between 6% (for applications like mobile phone integrations, industry-specific UC applications) to 17% for unified messaging. See exhibit 2.

Increasing UC application adoption requires vendors to create more plug-and-play solutions, thereby minimizing the implementation fees that many UC applications require. In addition, channel partners need to set-aside part of their implementation timelines and budgets for “train-the-trainer” time associated with UC applications on the new VoIP solution.

E-mail me at SHilton@yankeegroup.com.