SMBs Across Asia to Invest US $500 Million on IP Telephony This Year.

Much of the drive will come from SMBs in Australia, Singapore, South Korea and New Zealand, according to AMI Partners

SINGAPORE -- Spending on IP telephony by SMBs (1-999 employees) across the Asia-Pacific region (excluding Japan) will exceed US$500 million this year, up more than 40% over last year. Overall, SMB spending on IP telephony (including IP Centrex, IP PBX and IP phones/adaptors) is set to experience compound annual growth rates (CAGR) of more than 45% in the next five years.

These findings were released today by New York-based Access Markets International (AMI) Partners, Inc. The results, based on new research, reveal that IP telephony, though low in penetration compared to traditional telephony systems, is slowly but surely making strides as a viable telephony alternative. This is especially significant among medium businesses (100-999 employees) which need to manage and control their spending on telecommunications.

"Within the Asia-Pacific region (excluding Japan), IP telephony will be driven by SMBs in Australia, Singapore, South Korea and New Zealand," says Cindy Sim, Singapore-based analyst at AMI-Partners. "The long-term savings that IP telephony can achieve presents a compelling value proposition that IT managers and CIOs cannot ignore. This becomes especially acute for companies that have multiple locations or branches within the country or abroad."

In addition, with broadband penetration among SMBs in countries such as Australia, Singapore, South Korea and New Zealand exceeding 90%, IP telephony can leverage the existing IP infrastructure and be deployed quickly with minimal disruption to the business. "Traditionally, large businesses were prime targets for IP telephony," Ms Sim says. "Today, SMBs also represent key focus areas for service providers. SMBs also want to enjoy the cost savings and flexibility that enterprises obtain with IP telephony."

Interestingly, AMI expects spending on IP telephony by small businesses (1-99 employees) in the region to overtake that of medium businesses in the next five years.

Spending on IP PBX will continue to overshadow IP Centrex by a significant percentage. However, this proportion will experience marginal decline over time as IP Centrex grows in popularity, due to increasing familiarity with hosted services.

Apart from the quality of the Internet infrastructure in certain emerging countries, traditional telephony remains the key challenge to IP telephony. Decision makers often need to be convinced of the value proposition presented by IP telephony and often demand evidence of significant ROI in such a system. Another important inhibitor is the resistance to change, with many decision makers unwilling to change anything if it isn't broken.

"To this end, a growing number of SMBs are exploring the option of a hybrid IP system as a potential first step," Ms Sim says. "Such a system would allow companies to experience cost savings and take advantage of IP telephony without having to completely replace the existing legacy communications network. SMBs can then decide to migrate to a pure IP model when they are finally ready to do so."

About the Study

AMI's Asia/Pacific SMB Global Market Forecast combines primary and secondary research to develop overall SMB market sizing and forecasts. The SMB Global Model tracks a broad spectrum of products and services, including computing, internet & connectivity, networking, storage, security, software, telephony and services & support. Additionally, it also provides firm counts as well as shipments and installed base data for an extensive list of IT categories.

For more information about this study, AMI-Partners, or our global SMB research, please call AMI-Partners at 212-944-5100, e-mail [e-mail], or visit the AMI Web site at www.ami-partners.com.

About AMI-Partners

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence Co focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, formerly group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications or multimedia.

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 20 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.