It’s odd to think of struggling Nortel Networks as a fourth-quarter bright spot in this recessionary world, but that’s exactly its role in carrier VoIP, where it’s the market leader.
The market for carrier VoIP equipment declined for the first time ever in 2008, dropping 6 percent despite strong, double-digit annual revenue growth every year since 2002. But Nortel was the big winner for the end of 2008, increasing softswitch and trunk media gateway revenue and gaining share in both categories, according to research firm Infonetics Research.
Italtel also had success, posting triple-digit increases in Class 5 softswitch sales in the EMEA region. And, Sonus Networks increased its trunk media gateway revenue 45 percent for the quarter, year over year.
Meanwhile, the number of residential and SOHO VoIP subscribers worldwide continues to increase at a steady clip, topping 107 million in 2008, driven mostly by EMEA and Asia Pacific
But that’s where the good news pretty much peters out.
"The fourth quarter of 2008 confirmed what we started seeing in the previous two quarters in North America, with signs in Western Europe and some parts of Asia as well,” said Diane Myers, directing analyst for service provider VoIP and IMS at Infonetics. “The market for carrier VoIP equipment has stalled due to large deployments nearing completion and shifting strategic priorities. The global economic downturn will likely exacerbate the drop in VoIP equipment sales.”
That’s not to say there’s not growth: For the quarter, the worldwide market is up 4 percent to $849 million — much weaker growth than is typical for the fourth quarter, but growth nonetheless. That was driven by modest gains in media server, softswitch and voice application server sales, while trunk media gateway and session border controller sales were down for the quarter.
The research firm found that in the States, large RBOCs and ILECs are putting the brakes on VoIP as major projects are (or have been) completed. However, cable MSOs are gearing up for PacketCable 2.0 residential VoIP deployments. They may postpone significant spending until 2010 given the current economic conditions, Infonetics found, as the downturn is forcing operators to move their capital expenditures to other strategic priorities.
