Asian SMBs to drive IP telephony

New study predicts that small and midsize businesses across the region will lead the Internet telephony market in 2006, growing by 40 percent.

Small and medium-sized businesses (SMBs) in Asia is projected to dominate the Internet telephony market this year with a 40 percent growth rate, new research shows.

Conducted by AMI-Partners, the study revealed that SMBs will spend almost US$600 million on IP (Internet Protocol) telephony this year, an increase of more than 40 percent over 2005. This market is also expected to grow at a compound annual growth rate of over 45 percent in the next five years.

Most of the SMBs surveyed in the study were from Australia, Singapore, South Korea and New Zealand. With a broadband penetration of more than 90 percent, SMBs in these countries can utilize Net telephony by tapping on the current IP infrastructure, according to AMI-Partners.

"The long-term savings that IP telephony can achieve presents a compelling value proposition that IT managers and CIOs cannot ignore," said Cindy Sim, a Singapore-based analyst at AMI-Partners. "This becomes especially acute for companies that have multiple locations or branches within the country or abroad."

Sim added that as a result, an increasing number of SMBs are considering the "option of a hybrid IP system" as an initial step toward Internet telephony. This allows businesses to benefit from the low costs and advantages of using an IP platform without replacing the current network, she explained. They can then make a complete crossover when they are ready, she added.

However, AMI-Partners noted that there is still limited growth in IP telephony across some emerging economies due to obstacles such as legacy telephony systems, quality of Internet infrastructure and resistance to change.

In the past year, several IP telephony vendors including Avaya and Cisco Systems, have intensified their focus on the SMB market.