Slowdown Could Mean Hard Times for VoIP -- or Signal Maturity

Carl Weinschenk

Could it be that the poster child of the new network, VoIP, is fading? Perhaps not, but it seems that the bloom is at least partially off the rose.


Garrett Smith's post at Smith on VoIP says there are five reasons that VoIP may be off the fast track it enjoyed in recent years: Double and triple digit growth doesn't last forever; the next wave of residential customers have concerns beyond price and are thus harder sells; next-wave business prospects are bigger organizations that are less inclined to take a chance; products and features are stagnant; and people get conservative when fearing a recession.


The bottom line, Smith says, is that growth will continue, but at perhaps a more modest clip than in the past.


This Channel Web piece mentions Smith's post. It also refers to a study by Infonetics Research that says the IP telephone market in North America receded by 2 percent between the last quarter of 2007 and the first quarter of this year. The year-over-year decline is 4 percent. The lead analyst on the study -- Matthias Machowinksi -- says the poor economic climate is the key. A retailer quoted in the story says that his business is up about 20 percent year-over-year, but he does acknowledge that business sales are becoming more challenging.


The thought that VoIP is losing its luster is not universal. Last month, GigaOm wrote a post that referred to reports from Telegeography and IP Democracy. Telegeography said that as of the end of March, about 13.8 percent of U.S. households -- 16.3 million lines -- use VoIP. Much of the good news came from the cable industry. A graph shows that the consistently upward trend since the first quarter of 2005 is not flattening. IP Democracy puts the top nine cable companies' total VoIP subscribers at more than 14 million.


By implication, one of Smith's rationales for the slowing of VoIP -- that in general sales are getting more difficult -- is overtly validated by this piece at Enterprise VoIP Planet. The writer says the first question a small business must ask itself before getting into VoIP is simply if it really needs it -- and then lays out a scenario for a small business in which VoIP is not the most prudent move.


Buy-in by the government is important for any sector. FierceVoIP reports that despite a massive VoIP rollout by the Social Security Administration (SSA), comments made at a meeting to discuss the General Services Administration's Networx program suggest that the federal infrastructure as a whole is lukewarm about VoIP. Speakers reportedly said the platform was not economically justified and, apparently, too new. More attention is being paid to virtual private networks and meeting IPv6 deadlines.


VoIP is here to stay, of course. It is a reality that growth slows as the first waves of easy converts are exhausted. Indeed, the fact that growth is slowing somewhat -- if it indeed is -- can just as easily be taken as a sign of maturity than of trouble.

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