VoIP Market Grows, Lifting Hardware Sales

By Greg Scoblete On Dec 4 2006 - 8:00am

VoIP-enabled hardware will grow dramatically, largely on the backs of business users, according to a new survey from In-Stat.

According to In Stat, worldwide IP phone shipments will grow from 10 million units in 2006, to 164 million units in 2010. Most of the growth will be driven by businesses filling in their PBX seats with IP-enabled phones, said principal analyst Keith Nissen. On the consumer side, a combination of residential VoIP phones and dual-mode cellular/Wi-Fi handsets will drive growth.

The growth in IP-enabled handsets will mirror the rise in camera-equipped cellphones, Nissen said. Consumers or carriers may not even choose to use the Wi-Fi functionality (as many ignore their phone's camera) but the chipsets costs will decrease to the point where phones makers will build IP-enabled phones away, Nissen said.

Stand-alone Wi-Fi phones will be eclipsed by dual-mode models, Nissen predicted.

There will still be a strong market for residential phone systems, Nissen added. "Homeowners are not willing to give up a home phone completely," he said. The home phone of the future will likely be an IP-enabled DECT handset with the ability to display "presence" (whether a caller is actually available) and user profiles, Nissen suggested.

There will be roughly 9.6 million U.S. VoIP subscribers at the end of this year, accounting for $2.6 billion in revenue, according to Carlsbad, Calif.-based research firm TeleGeography Research. By 2010, the firm expects VoIP subs to climb to 23.7 million, generating $8 billion in revenues.

An October survey of early adopters from ChangeWave found that 20 percent use some form of VoIP service in their home and another 13 percent plan to use it in the coming year, tracking results from a similar survey in July. The flattening of growth suggested to ChangeWave that VoIP had fully matured as an "early adopter" product.

While subscriber growth is steady, service provider market share is slightly more volatile. Vonage is losing market share to both cable companies and the PC service Skype, the firm found. Of current VoIP users, 29 percent use Skype, unchanged since July, while 16 percent reported using a cable-delivered service (up 1 percent from July). Conversely, 24 percent say they use Vonage, down 2 percent from the previous survey.

According to ChangeWave, 20 percent of respondents who plan on signing up for a VoIP service indicated a preference for Skype, 17 percent for a cable-delivered service and 15 percent wanted Vonage.

The research firm also found customer satisfaction improvements, with 90 percent of respondents saying they were "very" or "somewhat satisfied" with their home VoIP service. Skype tops the list of contented customers with a 94 percent satisfaction rate followed by cable (89 percent) and Vonage (87 percent).

Cable companies have enjoyed the best success. Only 9 percent of cable VoIP customers say they'll switch providers while 22 percent of Vonage customers said they were likely to change service providers.

CHANGEWAVE SURVEY: Which one of the following provides your VoIP service?
Skype (SkypeOut)29%29%23%19%17%
My Cable Company16%15%15%16%10%
8X8 (Packet8)2%3%3%6%8%
AT&T (CallVantage)2%2%1%1%2%
Yahoo! Messenger2%1%2%NANA
Net2Phone (VoiceLine)1%1%1%1%2%
Verizon (VoiceWing)0%1%1%1%0%
Don't Know / NA / Other16%15%19%25%22%

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