Enterprise Equipment: Voice Solutions: IP Leads the Way

VoicenData Bureau
New Update

FY '06-07 saw Indian enterprises looking at communication as a strategic

investment. While large enterprises invested in advanced communication

solutions, a new section of potential adopters emerged in the SME segment owing

to the buoyant economy and globalization.


Communication is an integral part of business processes, and last Fiscal saw

the communications industry undergoing a paradigm shift. The deployment of pure

IP and the converged multi-service communication systems began last year. These

converged systems give a capability to provide legacy connectivity like PCM-TDM

and IP as well. Standards and interoperability issues were dealt with.

According to VOICE&DATA estimates, the voice solutions market stood at Rs

1,413 crores growing at 27.8% in FY '06-07. The IP-PBX took the lion's share of

50% and TDM PBX reduced to 30% of the total market, and other technologies such

as KTS contributed 20%



With VoIP becoming popular, companies are realizing the benefits of
IP telephony beyond the cost reduction factor. IP enables merging of voice and

data in a single network, thereby providing an enhanced communication

experience, which is imperative for any competitive organization.

VOICE&DATA estimates that, unlike FY '05-06, 2006-07 saw the highest growth

in the IP-PBX segment, with many organizations investing in high-end IP

solutions. Many managers looked at voice solutions as a way to help them reduce

rising administrative expenses, extend business reach, boost productivity, and

realize measurable returns on their infrastructure investments.

The market is just starting to ramp up as broadband connections accelerate.

Enterprises and telcos are starting to realize the vast advantages of VoIP and

are beginning to intensively deploy VoIP solutions. From TDM, India is moving to

VoIP-enabled solutions, while the legacy PBXs are moving to digital analog



However, the adoption of IP telephony in India is on the express lane to

prosperity and growth. This was the consequence of a chain of events. The

withdrawal of the TRAI regulation, which imposed restrictions on using IP

telephony by enterprises led to enterprises looking positively at IP telephone

deployments. This caused the service provider market to evolve.

Due to rising broadband penetration, a huge market is opening up and the

importance is on cost savings. In India, VoIP telephony can be used for making

phone calls from a PC to a phone abroad, from a PC to another PC within and

outside India, and between SIP/ H.323 devices globally. The advantages of using

this technology are apparent. Besides the freedom it provides, wireless VoIP

phone systems also allow organizations to combine communications to include

phone, email, and text messaging, allowing them to work together as one system.

This efficiency is a time saver, as well as a money saver. Organizations will

find that they can avoid lengthy contracts with phone companies in favor of

wiring systems that give the businesses more options.

PBX has moved from a simple TDM switch to a converged IP platform supporting

standard TDM, ISDN, ATM and IP connectivity on a single platform. Today,

enterprises are looking for 'real time communication' that is integrated with

the IT infrastructure and business support systems. Some of the dominant

technologies in the enterprise communication arena are VoIP, IP trunking, and IP

distributed architecture. The trend is also shifting towards adding mobility

features like GSM gateways and information mobility on the basic PBX platform.


Hybrid solutions have also seen growth especially in those cases where the

organization is shifting to an IP solution for the first time. Cost has been the

main driver for hybrid solutions. This is because the cost of deploying pure

IP-PBX is high, and so users prefer go with hybrid solutions.

Thus, FY '06-07 saw IP-PBX eating into the share of traditional PBX systems.

The traditional PBX market is shrinking by 10% y-o-y and IP- PBX is growing by

about 20% y-o-y. Growth in IP-PBX shipments has been over 30%. However, due to

restrictions on terminating computer-originating calls over a PSTN network, the

growth of VoIP has been restricted. Low PSTN tariffs too have discouraged PSTN

operators from investing significantly in the VoIP carrier equipment.

According to VOICE&DATA estimates, Avaya Globalconnect emerged as the top

voice solution vendor with 28.3% market share and revenues at Rs 400 crore. The

second is Cisco with revenues worth Rs 250 crore followed by Siemens with Rs 226

crore. The highest growth since FY '05-06 was that of Cisco's, which grew around

82.5% in FY '06-07 with a market share of 17.7%. Coral Telecom also registered a

growth of 19.5% with revenues touching Rs 49 crore. Among others, Matrix

registered revenues of Rs 11.38 crore while D-Link clocked Rs 2.3 crore.


Top Players

(FY '06-07)


Revenue (in Rs Crore)

Growth (in %age)

FY '05-06

FY '06-07

























Coral Telecom












*Others includes D-Link, Matrix, Nice, Accord, Samsung


The IT and ITeS vertical invested the highest amount in voice
solutions especially IP-PBX. This is because, being a very people-intensive

segment, it focuses on technologies to enable productivity increase of the

workers. The second vertical that contributed the most to the growth of this

segment was BFSI. Apart from the private sector banks, the PSU banks are also

moving toward deploying advanced voice solutions. The SMB sectors have also

contributed largely to the growth of voice solutions in FY '06-07 in India.


Cisco sold around 15,000 IP phones to organizations in the IT/ITeS segment

and won huge orders from the government sector for e-governance initiatives. On

the other hand, Nortel provided converged IP voice and data connecting 150 South

Indian Bank branches along with getting orders from major companies such as

Hinduja TMT, ICICI One Source, Bharti Airtel, and Reliance Infocomm. It had a

very strong presence in the government and defense sectors and also launched

their SMB strategy. The biggest deal bagged by Nortel was the IVR project for

Indian Railways. Nortel also undertook a 'Call 108' (911-style) emergency

services contact system for Emergency Management and Research Institute (EMR) in

Andhra Pradesh which would eventually be deployed nationwide.

Siemens bagged big orders from Delhi International Airport Ltd, Bangalore

International Airport, and Hyderabad International Airport where it provided

multiple networked IP-PBX systems with call center applications. It deployed

IP-PBX for the corporate office and plant of Claris Pharma and undertook a large

IP-PBX deployment for ICICI Lombard. For Siemens Information Processing Systems,

it deployed IP PBX with applications for call centers, wireless LANs, etc.

While Alcatel-Lucent had RBI and ICICI in their client list, Ericsson bagged

a prestigious 1st MX One (IP-PBX) order from Royal King Palace of Nepal

supplying 400 ports for voice communication with DECt for mobility. Ericsson

also got orders from Soldiers eCare Contact Center (SeC) along with a 60 seat

call center for Delhi Police and a 3,000 port order for MX One from Bhutan Steel




Real-time IP applications on converged networks will revolutionize the
enterprise communication market


However, the voice solutions market also faces certain challenges
that are hindering its growth. The PBX industry is witnessing a drastic change

on the technology front. With the introduction of technologies like IP

telephony, the definition of enterprise communication itself has changed. So

continuous enhancement of product lines is taking place to cater to the latest

IP technologies, while simultaneously decreasing price levels are the main

challenges faced by the PBX industry.

Also, many more customers are looking for pure IP deployments but the

prohibitive costs of IP terminals restrict large deployments of pure IP systems.

On an average, the converged systems are available at Rs 4,000 per user while

pure IP systems including IP terminals are available at Rs 15,000 per user.

There is very little awareness among the users about the advantages of IP

telephony in terms of total cost of ownership. They need to be educated. Another

challenge is that the government regulations do not allow connectivity of PSTN

and CUGs. Although termination of both on PBX systems is now allowed, it needs

to be logically portioned. This more or less cancels the benefits of IP for the


Another aspect is infrastructure. There is a need for high-quality broadband

connectivity and cost effective leased lines for pure IP-PBX to function well.

With deregulation coming in, the cost of leased lines is coming down but the

international leased lines are still expensive as compared to the western


Also, in a wireless VoIP phone system, the number of calls that can be placed

by callers at a time is limited. An access point in a system can't handle more

than a few calls at a time. This limited capacity, therefore, has resulted in

the inability of many businesses to use wireless VoIP. Businesses and industries

that require huge volumes of communication on a constant basis would simply

overload a wireless network.

Market Drivers

High-end Enterprises

n Need "Intelligent
Communications," which will help them integrate communication applications

with business applications and business intelligence

n Business continuity is
the "critical success factor"

Low- and Medium-end Enterprises

n Need investment
protection to leverage existing technology investments and safeguard future


n Migration to IP
telephony is to be viewed as a part of an integrated IT strategy including

migrations to MPLS-based WANs and QoS-based LANs

Small and Medium Enterprises

n All in one-voice
communication systems are now being perceived as a key business enabler in

small enterprises

n Although IP telephony
does bring in savings for organizations, hybrid systems remain an option for

smaller enterprises. IP telephony technology has gained a strong foothold in

the mainstream market



The industry is moving towards unification. Enterprise and carrier

networks are overlapping in functionality. The way forward in such a scenario is

to offer comprehensive solutions catering to different market segments like SOHO,

SME and large enterprises. Extensive customer reach, backed up by high quality

service support will be a differentiating factor. Offering solutions for

verticals like hospitality, trading etc, will generate a new market segment. IP

converged network is a basic requirement of an enterprise now. Real-time IP

applications on converged networks will revolutionize the enterprise

communication market.

FY '06-07 saw a number of deployments and this reveals that the IP telephony

equipment market is quickly emerging from the regulatory roadblocks that it

faced. There has been a significant improvement in the technology and thus,

IP-PBX is bound to grow at the same rate in the coming years. Large, booming

economies of China and India represent a huge opportunity to equipment vendors,

systems integrators and telecom carriers. More and more organizations will move

to pure IP-PBX solutions instead of opting for hybrids and as companies in India

start considering IP to be the backbone of their business infrastructure, IP

telephony market is expected to reach $300 mn dollars by 2010. With Indian SME

telephony market expected to reach $158 mn, it is becoming a hot focus area for

the solution providers as well. Players like Avaya Globalconnect have already

started alliances with other vendors to provide solutions for this segment.

Other players are also focusing on this segment and also on government, retail,

manufacturing and FMCG. India is expected to overtake Australia's IP telephony

market by 15% in 2010. Another feature, which is expected to gain traction, is

the applications for IP-Telephony. With bigwigs such as Avaya Globalconnect and

Nortel focusing on services there will be a lot of action to see in the coming


Sonia Sharma