Depending on the point of view the Canadian VoIP adoption glass is either half full or half empty, analysts say, but it’s about to get a lot fuller.

Toronto-based consulting company Frost & Sullivan have released the 2003

Canadian Enterprise Converged Network Adoption Study. The study is the first time the company has focused exclusively on the Canadian VoIP market growth. That growth has been significant but has not reached the levels predicted a year or two ago, said Frost & Sullivan strategic analyst Ronald Gruia.

The 2002 market for IP-Centric PBX solutions totalled $118.5 million, the study showed. IP-Centric line shipments were up approximately 134 per cent from 2001, totaling over 147,000 lines. Frost & Sullivan forecast a compound growth rate of 39.9 per cent for the market, expecting it to reach about $455 million by 2006.

Gruia said Y2K issues bear a large part of the responsibility for the slower than predicted growth of VoIP telephony. A lot of companies decided to replace their PBXs right in the middle of their depreciation cycle to buy new systems just so that they would avoid paying the Y2K upgrade fee. As a result of the update many companies have relatively new technology in place and are not ready to replace it yet.

“”You’re going to have to give this space some time to age before you see the mass adoption that people were forecasting even a couple of years ago,”” he said. “”People are not going to migrate to this next technology just for the sake of the fact that it is something new.””

The technology has not made a big impact on the small and medium businesses, adds Frost & Sullivan VoiP Equipment program leader Jon Arnold. The study found that smaller enterprises have a very limited understanding, awareness or even interest in VoIP and IP telephony. The lack of interest is based on some lingering misconceptions about the quality of VoIP technology, he said, but also these companies are not calling for much more than they already have.

“”Their existing infrastructure does a good job,”” Arnold said. “”If they are going to do something different they’re really looking to save money. They’re not looking to leverage the technology to do new things in new ways.””

Large enterprises have a completely different outlook on VoIP and the majority of those surveyed by Frost & Sullivan researchers said they consider Voice over IP as the next generation solution for their business.

Cisco Systems Canada Co. marketing manager Brentz Myers said that location-based opportunities such as new office or branch openings have led to a lot of IP-Centric system sales. Companies are also turning to IP telephony at the end of their traditional PBX’s life cycle or expiry of an existing Centrex contract.

Cisco is recognized by the study as the leader in the IP/LAN telephony space as well as the IP phone market. Myers said the company’s success in the enterprise VoIP space has largely been due to the effort Cisco made to ensure their solutions could integrate into existing legacy systems.

“”We knew from the beginning that no one would ever want to deploy a fairly new technology all at once and get rid of something that was essentially working well,”” he said. “” We knew we wouldn’t see that.””

A concern about how IP telephony will work with existing legacy systems is still a major inhibitor of IP-Centric PBX solutions for large enterprises, Frost & Sullivan found. However, the study showed that reduced network operating expenses are providing an attractive enough ROI scenario for most companies to get over their hesitation.

One promised benefit of VoIP technology that has received a lot of attention has not yet materialized, Gruia pointed out. The single voice and data network is simply not to be found.

“”No one is doing that yet,”” he said. “” Basically people don’t trust the technology enough yet to put everything onto the one network. But that should come with time.””

Frost & Sullivan interviewed both vendors and end users for this study. The researchers expected that the study would be conducted on an annual basis from now on.




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