In-Stat/MDR Reports Media Gateway Market Hits Bottom, Begins Recovery.

Business Editors

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--June 10, 2003

According to recent research released by In-Stat/MDR (http://www.instat.com), the media gateway market has put the worst of its recent decline behind it, with port shipments and revenues already starting to increase. The high-tech market research firm reports that shipments of media gateway packet voice ports decreased by 35.8% in 2002 to 4.642 million ports, while revenues declined by 48.1% to $493 million. However, on a sequential quarterly basis, revenues for this market increased by 37.9% in the fourth quarter of 2002. For all of 2003, In-Stat/MDR expects media gateway revenues to increase by a total of 16.6% while voice port shipments will increase by 24.1%.

"Packet voice equipment was supposed to revolutionize the telecommunications industry, before the telecom CapEx slowdown hit the packet voice market hard," said Norm Bogen, a research director with In-Stat/MDR. "However, the eventual transition to packet voice is inevitable. It is just going to take longer than many people thought."

In-Stat/MDR reports that there are several reasons why the transition will take longer:

-- Voice quality in the early days was not very good. That

problem has been solved.

-- The CapEx slowdown caused by years of overspending, big debt

loads and service provider bankruptcies. The

telecommunications industry is still in a capital-constrained

environment.

-- The promised CapEx and OpEx savings were difficult to

find/justify for many service providers. That is because much

of the software to make packet voice networks work efficiently

was new and immature. Also, most VoIP implementations run in

parallel with a traditional circuit-switched network for a

period of time until the old network is replaced. That

actually leads to higher OpEx in the short term.

In-Stat/MDR believes that true savings from packet voice will be achieved as service providers (and their vendors) do a better job of planning their implementations. Even with impediments, there have been pockets of growth (international long distance, long distance calling cards, rural Local Exchange Carrier replacement of old Class 5 switches) over the last year. And there are additional opportunities for growth on the horizon, including cable telephony and wireless networks.

The report, "Media Gateway Market Hits Bottom, Begins Recovery" (#IN030833CT), includes a description of the applications that will drive media gateway shipments, market segmentation by platform type, and by density. A five-year market forecast is also included. To purchase this report or for more information, please visit: http://www.instat.com/catalog/cat-ct.htm or contact Erin McKeighan at [e-mail] or 480/609-4551. The report is priced at $1,995.

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals, and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.