AMI-Partners: Hosted VoIP Biz to Reach US$416M in N. America This Year.

The concept of voice communications as a service is becoming very appealing to the small businesses, says new AMI study

NEW YORK -- The North America small and medium business (SMB) segment for hosted business-VoIP (Voice over Internet Protocol) is set to reach US$416 million this year - from about US$165 million in 2005. Between 2005 and 2010, the cumulative growth rate will cross 56.9%, according to the latest study by Access Market International (AMI) Partners Inc.

"In particular, the small business (SB, or companies with up to 99 employees) segment is forecasted to grow at a spectacular 69% on a cumulative basis for the next 5 years," says Sanjeev Aggarwal, AMI-Partners' New York-based Vice President for SMB Infrastructure Solutions. "The concept of hosted VoIP is analogous to software-as-a-service (SaaS) where upstarts like Salesforce.com and NetSuite are gaining rapid adoption. Similarly, the concept of voice communications as a service is becoming very appealing as these small businesses have almost no IT/voice communications expertise and resources."

The market opportunity for hosted business-VoIP solutions for SMBs is huge and growing rapidly - and so is the competition, which is increasing with participation from traditional telecom and cable companies, equipment vendors, and focused complimentary service providers.

There are many drivers that are influencing SMBs to adopt hosted business-VoIP, including predictable monthly voice communications expenses with no up-front capital expense, toll savings for intra- and inter-company long-distance and local calling. "Simple, secure, very reliable, easy-to-use solutions supporting unified messaging and mobility are key for small businesses that never want to miss a customer call," Mr. Aggarwal says. "Helping SBs appear more professional and larger, especially SBs that have a store presence and web presence."

AMI-Partners has just published a Telecom/IP Communications focused report - "SMB Interest Perks Up In Hosted VoIP: North America hosted VoIP forecast outlook, needs assessment and positioning implications". This report provides a comprehensive five-year market forecast and vendor market analysis of the North America hosted VoIP market for SMBs. Some key findings from the reports:

* North American SMB hosted VoIP market spending was US$164.9 million in 2005 and will cross US$1.56 billion by 2010, at a CAGR of 56.8%.

* Hosted VoIP installed seats in the North America SMB market are forecasted to rise from 393,967 in 2006 to about 3 million seats by year 2010.

* The market penetration of hosted VoIP seats will increase from less than 2% in 2006 to over 7% by 2010, with a CAGR of 65%.

* The adoption of hosted VoIP will be particularly high in companies with 10-50 employees.

* Last year, the leading vendors (based on seats) were Covad Communications, XO Communications, Packet8, Cbeyond, and M5 Networks.

* Telcos are not currently marketing VoIP services aggressively to the SMBs because of fears of cannibalizing their customer base and revenues.

* However, as the market growth and adoption rate increase, leading telecom service providers will become more aggressive in marketing VoIP to SMBs.

* Vendors covered in the report include Covad Communications, XO Communications, Packet8, Cbeyond, M5 Networks, AT&T, Verizon, Sprint Nextel, Qwest, Aptela, Speakeasy, Bandwidth.com, and Apptix.

About the Study

These reports highlight AMI's continued focus through a series of studies published under the recently launched AMI-Partners' SMB Telecom/IP Communications Service. These reports examine:

* Worldwide PBX (IP and TDM) market opportunity and spending from 2005 to 2010, by SB and MB segments.

* North America PBX (IP and TDM) market opportunity and spending from 2005 to 2010, by SB and MB segments.

* Penetration of Telecommunications products in the SMB market in 2006.

* IP Telephone Dynamic Competitive Environment.

* Worldwide SMB IP and TDM/Key system PBX revenue and market share by vendor.

* US Small Business IP and TDM/Key system PBX revenue and market share by vendor.

The report also provides actionable recommendations for vendors, service providers, channel partners, and SMBs. For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail [e-mail], or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.