Avaya VoIP sneaks past Cisco in first quarter

Avaya has scraped past previous leader Cisco for the first time as SMBs buy into the IP telephony trend in Frost & Sullivan's latest Australian market analysis.

Foad Fadaghi, ICT research director at market analyst Frost & Sullivan, said Avaya had sneaked past Cisco, stealing the top spot in the Australian IP telephony market for the first time in the first quarter of 2005.

"It's very, very close," he said. "Avaya had 21.9 percent, and Cisco 21.7 percent [market share]."

Fadaghi said Avaya's sales and "value proposition" had done quite well at the start of the year. Meanwhile, Cisco wasn't able to maintain the same "exceptional growth" that had done so well for the giant vendor in the first quarter of 2004.

"But some of that is [from] delayed purchases, which we expect will help Cisco in the second quarter," he said.

That said, "traditional" telephony vendors -- such as NEC, Nortel and Avaya -- were expected to perform strongly in 2005, he said.

"In the past, Cisco was pretty much the 'market-breaker', if you like. Cisco had a message of IP-only that resonated with the market last year," Fadaghi said. "In previous years, traditional vendors had a mixed message."

He said the traditional vendors had broken past their previously ambivalent approach and started clearly promoting IP-based telecommunications to customers.

Further, Avaya had often done well in the banking and finance verticals as well as in the contact centre. Banking and finance would likely spend more on IP telephony this year, Fadaghi said.

"For the last few years, it has been a bit of a 'wait and see' approach," he said.

SMBs were also tipped to buy a lot more IP telephony. Sales to smaller companies were expected overall to grow faster in coming quarters than sales to large organisations, Fadaghi said.

"In 2004, [SMBs] were 64 percent of the total market. That's businesses with fewer than 500 seats. We believe that will rise to about 76 percent of the market by 2007," he said.

He said the number three player in the first quarter was Alcatel. "I think that Alcatel has, over the last 12 months, increased its IP telephony offering and their offering has started to gain some traction," Fadaghi said.