Where’s VoIP Going? A Look At VoIP Industry Trends

April 13, 2008 by Garrett Smith

Where is the VoIP industry going?

Of late, it is the question I field most often.

I am not sure if it is because as the market mature, seeing what’s next is increasingly important, or if it is because as the marketplace matures, what worked yesterday is no longer working today (or will work tomorrow). Whatever the case may be, I thought it would be fitting to address where the VoIP industry is going, in a short and sweet high-level digest.

VoIP, in general

The buzz surrounding VoIP has worn off. Overall interest in the VoIP technology is trending downward due to this, although the market is still growing. People have wised up to the fact that VoIP is just another transport mechanism for voice and therefore what is currently hot is the applications and business enhancements that come as a result of using IP for voice transport. The first adopter’s have come and went. This new wave of interested parties are no longer looking to just save a buck, but in almost all cases, is looking at VoIP as a way to “improve” or solve a problem. If you are a VAR, Manufacturer or Service Provider, go there.

VoIP Service

Consolidation, bundled offerings and tighter margins are the name of the game in the service provider marketplace. Over the past few years, hundreds of providers have sprung up and many are now fighting for their lives. Without control of the pipe or a true differentiator, many are now looking to merge or get acquired by other providers. For those who were lucky enough to see that survival could come in the form of bundling multiple services, the trend will continue as getting “multiple services delivered through one pipe from one provider” is the ultimate goal for many service providers. Expect this pursuit and these offerings to continue to come pouring into the marketplace. It won’t be easy though, many, if not most, of the service providers who have entered the marketplace over the last few years, have aided the race to zero and as more struggle to survive, I expect service providers to continue to operate on thinner and thinner margins. Innovate, collaborate or die.

VoIP Hardware

There is not much new here, except in the handset space. The latest here is a move towards pushing applications down to the handsets, applications that improve or make business processes more efficient. While these applications have not yet hit mass adoption by end users, manufacturers are spending big (and talking big) when it comes to this new functionality. In addition to applications, as the pipes get cheaper and larger, more and more vendors (such as Polycom) are creating handsets that can handle larger codec’s that will increase call quality and better the user experience. HD Voice will be big, soon.

Open Source

Open source companies are growing up and therefore there has been an overlaying theme of monetization occurring. Monetization of the technology, the community, the websites and of course the ecosystem. This shouldn’t be viewed as a bad thing, just because these companies are open source does not necessarily mean they should not be pursuing revenues and profitability. They are in business to make money, as is everyone. If your business was impacted as a result of these efforts, should have had the foresight to see where they were going; it was inevitable.

Another side trend, in open source telephony, is the movement towards the “appliance.” I have been talking to open source companies in this space about an appliance based approach since 2005, when a conversation with a small business owner lead me to the thought that most people want a phone system, to look like a phone system (whatever that is) not a PC or a server. I am not crediting myself with the idea, but of late, everyone has their own appliance…and from what I have seen it has been could for their business (and their VAR’s). I don’t see too many more appliances hitting the street as the market is saturated, but I do see the appliances continuing to evolve and becoming a selling point for open source companies when recruiting resellers.

This was pretty brief and honestly, I could go on for hours, but I won’t. What I would like to do though, is open up the floor for others. Have a trend you would like to discuss? Leave a comment below!

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