Small firms in Asia spend big on VoIP

Small and medium sized businesses (SMBs) in Asia will spend more than US$500m on internet phone calls this year, researchers predict.

The spending represents an increase of more than 40 percent over last year and growth is expected to continue at a similar pace, according to research consultancy Access Markets International Partners.

"Traditionally, large businesses were prime targets for IP telephony," said Cindy Sim, an analyst at AMI Partners' Singapore office.

"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."

IP telephony rollout is strongest in areas with good broadband coverage. " Within Asia-Pacific, excluding Japan, IP telephony will be driven by SMBs in Australia, Singapore, South Korea and New Zealand," predicted Sim.

The IP telephony market will grow at a compound annual rate of more than 45 percent over the next five years, according to AMI's forecasts.

Vendors are likely to see margins fall as smaller enterprises take to VoIP in greater numbers, according to Frost and Sullivan research published earlier this year.

The firm predicts that the proliferation of VoIP devices supporting the SIP standard will lead to falling prices and a more open market.

"The long-term savings that IP telephony can achieve presents a compelling value proposition that IT managers and chief information officers cannot ignore, " said Sim. "This becomes especially acute for companies with multiple locations or branches within the country or abroad."

However, the analyst warned that business decision makers may require education to convince them that IP telephony can have a significant positive impact on the bottom line.

IP telephony vendors may find managers unwilling to risk a sudden change from functioning traditional telephone networks to untried IP-based systems.

"To this end, a growing number of SMBs are exploring the option of a hybrid IP system as a potential first step," said Sim.

"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."

AMI defines small businesses as those with fewer than 100 employees, and medium sized businesses as those with fewer than 1,000 employees.