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AMI-Partners' Study Predicts IP Telephony Spending among SMBS Worldwide to Exceed $1.2 Billion During 2004.

NEW YORK -- AMI-Partners:

--IP Telephony Spending Will Continue to Expand at a Brisk Pace Creating Significant Opportunities for Service Providers and Equipment Manufactures Around the Globe

--AMI Predicts a Market Growth Rate of Over 40%

According to AMI-Partners' bi-annual worldwide SMB IT and telecommunications opportunity sizing study titled "The SMB Global Model", IP telephony spending among SMBs worldwide is expected to touch $1.2 billion by the end of 2004. VoIP equipment, such as IP PBX and IP phones/adaptors, is expected to drive approximately $1.1 billion of this figure, up 50% from the $754 million spent during 2003. VoIP services, such as IP Centrex, will contribute approximately $145 million of spending during 2004.

Based on AMI-Partners' comprehensive annual primary research-based tracking with over 5,000 SMBs across the globe, The SMB Global Model study predicts worldwide SMB IP telephony spending will exceed $4.5 billion during 2008, suggesting a 2003-2008 compound annual growth rate (CAGR) of 41.3%. APEJ (Asia-Pacific Excluding Japan) and EEMEA (Eastern Europe, Middle East and Africa) will grow their combined share of this figure from 17% to 22% during the same period, as North America's share adjusts from 53% to 46%.

Key findings regarding worldwide SMB IP telephony usage include:

--Worldwide IP telephony spending reached $806 million in 2003, with an annual growth rate of 41% expected over the next 5 years

--The SMB market is virtually untapped by VoIP services, such as IP Centrex, but market adoption is expected to grow at a CAGR of almost 85% over the next 5 years

--Almost 6% of MBs currently use IP PBX, with an expected penetration of over 20% by 2008

As SMBs attempt to expand their customer base beyond their local reach and continue to outsource services overseas - such as call centers - long-distance call volume is on the rise. However, while approximately 28% of total telecom spending is currently attributed to long distance/IDD spend, this portion is expected to continually decrease, making up only 23% by 2008. The increasing volume, coupled with decreasing spend, indicates that SMBs are rapidly adopting VoIP technologies for more cost-effective ways of conducting business outside of their local area. Currently, approximately 110,000 SMBs worldwide have implemented IP PBX, while another 56,000 are expected to during 2004. With IP Centrex in an even earlier stage of adoption, approximately 9,000 SMBs subscribe to such services. Another 13,000 SMBs are forecasted to use IP Centrex by the end of 2004. "We see the market being driven by general mobility-related features in the near term with business-process-oriented applications driving growth over the long run", said Deepinder Sahni, Sr. VP at AMI-Partners.

Emerging Markets Aim To Reduce Telephony Costs While Increasing Overall Infrastructure Flexibility

As SMBs in India, China and Russia continue their rapid adoption of PC and networking gear, VoIP will inevitably be viewed as a convenient way to reduce telephony costs while providing increased value to other branches of infrastructure. SMBs in these emerging markets spent $19.4 million on VoIP in 2003, and are expected to spend over $200 million in 2008. "Emerging markets have strong potential - they are under-penetrated by communications technology in general and have little legacy equipment holding back new VoIP investments", said Darin Aurvichitaroon, Analyst at AMI-Partners.

Mature Markets Push For Enhanced VoIP Applications And Convergence To Increase Productivity

Widespread broadband usage in the mature markets has set the foundation for VoIP to make waves in the next few years. SMBs in North America and Western Europe are beginning to realize the potential of VoIP beyond simply reducing telephony costs. For the increasing number of mobile employees, who travel 4-5 times each month, VoIP applications offer the ability to manage business processes, collaborate with team members from around the world on multimedia presentations, and stay connected with customers, vendors and coworkers - all in real time - regardless of geographical location. Although over 90% of VoIP spending in mature markets is currently attributed to VoIP equipment, VoIP service spending is on a steady rise, forecast to contribute over 16% of North American VoIP spending in 2008, and almost 30% in Western Europe during the same year.

Newly Industrialized Nations Need More Efficient Ways To Coordinate With Global Partners

As Singapore, Taiwan and Korea continue to merge into global supply chains, SMBs are pressured to find more cost-effective methods of communicating with business partners around the world. SMBs in these markets spent $11.5 million on VoIP in 2003.

The rapid market adoption of VoIP, whether premise based or provided as a service will serve to drive the revenue growth of major equipment manufacturers such as 3Com, Avaya, Alcatel, and Cisco and allow smaller manufacturers, such a Inter-Tel, Shoreline and Mitel, to see strong growth on a global basis.

This AMI study, titled The Global Model, provides a detailed picture of IT adoption and spending patterns in the SMB space across 28 IT sectors and 17 countries, with roll ups to regional and worldwide views. The number of businesses and their spending on various technologies - including wireless LANs, IP PBXs, VoIP, outsourced IT services, storage, VPNs/firewalls, intrusion detection, CRM, ERP/SCM - are examined in depth across the 2003-2008 time frame. The study also provides drill down views of each of these technologies by 8-employee size and 7 vertical market segments and serves as the industry's most comprehensive worldwide SMB market planning tool.

For more information about this study, AMI-Partners, or our Global SMB research, please call AMI-Partners at 212-944-5100, email ask_ami@ami-partners.com, or visit the AMI Web site, www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc. (AMI-Partners)

The above findings were released today by New York-based Access Markets International (AMI) Partners, Inc., a leading consulting firm specializing in IT, Internet, Telecom and business services market intelligence, trends and strategy with a strong focus on global small and medium business enterprises. AMI conducts the IT industry's most comprehensive annual tracking surveys of small and medium business (SMB) enterprises in several countries including the U.S., Canada, France, Germany, U.K., Australia, China, India, Japan, Singapore, South Korea, Brazil and Mexico.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital and actionable market intelligence - focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower the firm's clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI-Partners was founded in 1996 under the name of Access Media International (USA), Inc. (AMI-USA) by Andy Bose, formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team spanning 10 to 25 years in IT, telecommunications, online communications, and multimedia. The team is comprised of individuals who formerly built careers at leading industry-companies such as ADP, Cablevision, Compaq, IBM, IDC, Gartner, McKinsey, and other major corporations.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 130 leading IT, Internet, Telecom and business services companies in the last seven 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; and its proprietary database of several thousand SMBs in the U.S., Canada, Europe, Asia-Pacific and Latin America. The firm invests significantly in collecting survey-based information with several thousand SMBs globally through the industry's most comprehensive SMB survey instrument, and is considered to be the leading benchmark for tracking SMB trends.
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