Parsippany, N.J. (PRWEB) March 25, 2009 -
New research from T3i Group LLC confirms all sectors of the telecommunications manufacturing industry have been affected negatively by the global economic situation. However, the major North American networking suppliers - Cisco, Avaya, Nortel, Mitel and NEC - have crafted ways to survive the downturn.
According to the just-released "InfoTrack for Enterprise Communications Full Year 2008 Report," customer spending on new IP lines and desktop gear declined significantly last year compared with 2007. As a result, U.S. manufacturer revenues totaled $3.7 billion, down 11 percent from 2007, while Canadian revenues for 2008 totaled $289 million, down 8 percent from 2007. Much of the downturn during 2H08 can be attributed to fewer orders from three key verticals devastated by the recession: financial services, manufacturing and retail.
The InfoTrack report also found total average selling prices (ASP) were down 1 percent in 2008, with IP platform prices dropping 4 percent due to reduced demand resulting from capex cutbacks and the shutdowns of unprofitable business locations. IP revenues in total fell 7 percent during the 12-month period, although smaller key system pricing remained stable (down less than 1 percent) due to the addition of embedded IP, wireless and applications functionality.
According to Bob Olson, Voice Technologies Analyst at T3i Group, there could be a near-term solution to slowed IP telephony spending: monies promised in the American Recovery and Reinvestment Act (also known as the stimulus package): "Fortuitously, the biggest winner for the telecom sector in the appropriations portion of the final 2009 stimulus bill is infrastructure, with nearly $137 billion targeted for miscellaneous improvements, including $9 billion to expand broadband Internet access. The justification for the $9 billion is based on building a level playing field for rural programs, including schools, libraries and hospitals. All that translates into new software and hardware sales."
While many vendors were feeling the recession's effects prior to the Act's passage, Cisco made big gains in the first half of the year and then maintained its shipment level in the second half. What's more, Cisco claimed the lead in total 2008 U.S. line shipments with a 24-percent share. The company maintained its high margins but, in doing so, it squeezed channel-partner margins on equipment sales but not on life-cycle services that more than made up for the shortfall. In addition, Cisco's outsourcing policy for manufacturing yielded the highest gross margin revenue (70 percent) per employee. Likewise, Cisco's outsourcing policy for life-cycle services yielded the highest services revenue per dealer.
To cope with customer capex cuts, according to T3i Group, Number Two Avaya responded with new reliance on an indirect channel model: It increased channel partner margins on equipment sales, and it allowed them to provide or resell services across the total system life cycle. Nortel, which at Number Three has been experiencing the worst of financial pressures in recent months, protected its large time-division-multiplexing (TDM) installed base last year by offering significant conversion incentives to channel partners and customers to migrate via line-upgrade promotions. For example, its Meridian 11 customers could migrate to CS1000E for as little as $125 per line while keeping their traditional desktop devices.
Mitel and NEC have been competing for fourth place for several years. In 2008, Mitel promoted its IP PBX life-cycle term leasing to get around a customer capex freeze, and it won 3300 ICP certification from Microsoft for customer SIP integration with Office Communications Server 2007. NEC continued to push its new IP PBX models but it experienced the double uncertainty of migrating from traditional to converged technology and dealing with how long the global recession will last.
For more information about the "InfoTrack for Enterprise Communications Full Year 2008 Report," go to http://www.T3igroup.com/marketresearch/enterprisecomm/IEC/ or contact Dennis Kelly (dkelly (at) t3igroup (dot) com, 973/602-0180) or Bonnie Fairbrother (bfairbrother (at) t3igroup (dot) com, 973/602-0181).
About T3i Group LLC:
T3i Group LLC provides market research, data, analysis, and consulting and advisory services to the telecommunications industry. It has clients in 46 countries and conducts its business through four operating units: InfoTrack publishes reports that analyze shipment, revenue, market share and other pertinent data of importance to telecommunications equipment manufacturers; TelecomTactics maintains a database of the features and functionality of major telephony systems; Tarifica maintains a database of pricing-related information covering 400 telecommunications carriers operating in 130 countries; and TelecomWeb (http://www.t3igroup.com) is a content provider with an editorial staff that authors and posts telecommunications-industry news stories and a monthly e-letter. The site also serves as T3i Group's primary delivery mechanism for distributing its reports, analyses and data to subscribers.
T3i Group LLC is headquartered in Parsippany, N.J., with additional offices in New York City; London, England; and Cherry Hill, N.J.
Press Contact: Debra Baker, 301/905-7703