Sliding business activity and tight financial markets that led to the economic decline in 2008 continue to affect business in Q1 2009, and the enterprise voice equipment market was not immune to these factors and trends. Worldwide enterprise voice equipment revenues declined 21% from $2.93B to $2.3B between Q4 2008 and Q1 2009. This quarterly decrease is the latest in the downward trend that has occurred in five of the last six calendar quarters, beginning in Q4 2007. After analyzing the current data, Synergy analysts do not forecast an immediate upturn in the voice business environment, and do not anticipate that the market will improve until GDP and job growth begin to stabilize and recover.

With the extended pause in enterprise telephony sales continuing, prospects and customers are assessing the economic effects on their budgets, postponing buying decisions, and waiting for global financial recovery and stability. Vendors such as Cisco, Avaya, Alcatel-Lucent, Siemens, ShoreTel, and Mitel that are in a strong strategic position can weather the present negative business climate.  However, vendors that are more exposed, NEC and Aastra, for example, are showing challenging market share progress, and vendors Nortel, 3Com, and Toshiba are struggling strategically and tactically.

From the perspective of spending by business size, in Q1 high-end enterprises were investing in products such as UC and collaborative applications that ride over their existing network. In the SMB space, where smaller businesses were more directly affected by the credit crunch, investment was limited, as many businesses were unable to secure financing for general operations and/or purchase of voice equipment.

A few bright spots in the market: in North America and Western Europe spending for voice equipment was somewhat restrained in January but picked up in February and increased momentum in March. Additionally, sales to verticals associated with government organizations realized some increases due to the anticipation of government stimulus money entering markets.   
 
More in-depth competitive and market share analysis on vendors and PBX product segments can be found in Synergy’s new SIA report, Q1 2009 Enterprise Voice Market Share Analysis. This report for the Q1 2009 period provides in-depth analysis and insights.

For more information about this or other Synergy products and services, contact Heather Gallo @ 775-852-3330 ext 101 or hgallo@srgresearch.com.