Q4 Slide Pushes Total North American Business Communications Revenues Down 6.6% in 2008

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IntelliCom Analytics Research: Software-Based Solutions Projected To Drive Overall Market Recovery Beginning in 2010

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Underlying weakness in the general business environment is currently being compounded by stability concerns impacting several prominent providers that are in the process of restructuring

According to new research contained in industry analyst firm IntelliCom Analytics' IntelliCom Market Performance Dashboard Full Year 2008 Report, North American Business Communications market revenues plunged by 15.5% in the fourth quarter of 2008 compared to the same period a year earlier. Results for the full year declined by 6.6% compared to 2007 levels. IntelliCom based these numbers on total manufacturer product revenues associated with premise-based communication platform hardware, end user devices, and communication software applications.

"The market was already trending downward earlier in the year, but the deepening of the U.S. market recession since the credit crisis took hold in October has quickly translated to reduced spending on Business Communications solutions", stated Frank Stinson, Partner and Senior Analyst at IntelliCom Analytics.

The IntelliCom report predicts that market conditions will get worse before they get better, with aggregate market revenues expected to decline by 7.8% in 2009 before positive growth resumes in 2010. "Underlying weakness in the general business environment is currently being compounded by stability concerns impacting several prominent providers that are in the process of restructuring," added Stinson, "Decision makers are being pressed to justify every dollar spent in this environment, and it becomes that much harder to rationalize moving forward when it is not clear that your provider will be there in the future in a form that you are comfortable doing business with."

IntelliCom also expects major changes in how business communication solutions are delivered as aggregate market revenues begin to grow again. Platform hardware revenues are projected to continue to decline as providers move away from packaged proprietary appliances to more software-centric alternatives. Conversely, revenues from key software applications like Call Control, Unified Messaging, Contact Center, and Unified Communications (UC) solutions are expected to outpace aggregate market revenue growth over the course of the 2010 to 2013 period.

"Restructuring efforts are as much aimed at determining where traditional voice providers fit into a software-centric competitive landscape as they are at dealing with the challenges of the current general business environment. This exacerbates short- to medium-term uncertainty, but ultimately, more targeted business value will be delivered to the customer," explains Stinson.

The IntelliCom Market Performance Dashboard is a quarterly market tracking service that measures vendor performance across all layers of the Business Communications value stack. Key areas of focus include core telephony software, platform hardware, end user devices, and emerging Unified Communications applications.

About IntelliCom Analytics                                                                                                                                                IntelliCom Analytics is a professional services and business research provider focused on the rapidly evolving intelligent communications market. With a broad set of competencies ranging from competitive assessments and benchmarking to highly targeted demand forecasts based on detailed embedded base analyses, IntelliCom Analytics brings a wealth of finely honed skills, expertise and market opportunity insights to client engagements. For further information, visit http://www.intellicom-analytics.com.

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