Finding the right time
Unfulfilled expectations for VoIP have led many would-be suppliers to reconsider their plans. "We're not in the process of rolling any kind of VoIP product to our customers at the moment," says Matthew Temple, marketing manager with bandwidth provider Asia Global Crossing (AGC), which launched into the Australian market last year anticipating VoIP would quickly become a major part of its business.
AGC's early optimism, like that of many others now scaling back their ambitions, was based on analysts' heady projections for VoIP's potential growth.
Several years ago, Dataquest predicted the global market for VoIP services would grow from just $US255 million in 1998 to be worth over $US21 billion by next year.
Recognising that VoIP had only really entered most companies' radar screens in early 2001, however, IDC last year issued more modest projections forecasting an Asia-Pacific market for VoIP services of just US$6.9 billion by 2005, up from US$213 million in 2000. "The promise is very enticing, but there is still a lot of apprehension about quality of service [QoS] issues," says Temple.
"All we've got at the moment is no different than analogue switched PSTN services; it's just different switches. The big deal is that you can manage it [better]. But there are a lot of legacy environments still in place, and we're not about to go out and develop new product lines in areas where we're uncertain of the market space. We're going to be fairly conservative and consolidate the product lines."
This apprehension, compounded by newfound corporate purchasing conservatism--which may ease if global economies pick up later this year--means that carriers may be the biggest beneficiaries of VoIP in the short term because they lure early adopters with promises of cost savings and easier management.
NEC and Optus, for example, are this year expanding their long-running partnership to offer VoIP as one of many services delivered via an "IP dialtone" to the customer's desks.
David Hanes, director of NEC Australia's Business Solutions division, believes telecommunications providers will play a key role in expanding usage of VoIP, particularly since companies like NEC can now upgrade PABXes and existing handsets to support the technology without having to replace existing gear. This approach, he argues, will increase customer confidence in VoIP.
"It's certainly cost effective from a customer point of view," says Hanes, who estimates simply shifting to VoIP can reduce companies' telecommunications costs by 20 percent.
"We can put existing handsets on the LAN, and users wouldn't know the difference. There's no additional training required, no change in functionality, and the user doesn't have to do anything special."
VoIP isn't free, however. Corporate Australia has spent heavily on upgrading network switches in the past several years, and with adequately functioning phone systems it's likely that most will avoid doing it again until those switches--or their long-suffering PABXes--are up for a refresh.
That was the driver for a recent VoIP upgrade at Melbourne's State Library of Victoria, which last year installed Cisco Systems VoIP--capable switches to replace its 14-year-old NEC PABX, which was so old it didn't even offer voicemail.
As well as gaining access to modern features, the library's VoIP investment has given its 330-odd employees the ability to automatically pull up customer details while talking to them on the phone.
The PABX is administered through a simple Web interface and can, in many respects, be treated just like any other Windows NT server. Handsets can be moved to new locations without having to reconfigure the PABX. Call forwarding, hunt groups, and grouping of multiple reception areas have all helped emulate the functionality of conventional PABXes.
"It no longer takes days of waiting for the service provider to get anything done," reports Ian Patterson, manager of the library's Technology Services division.
On top of those benefits, Patterson adds, is the knowledge that the library will save the more than AU$100,000 annually it was previously paying for PABX rental.
With the new IP PABX due to be paid off in two years, ongoing capital costs will be almost completely eliminated. Like many other organisations, the State Library of Victoria replaced its old handsets with new devices that work like phones but act like IP nodes.
While such handsets are certainly usable and well-proven, they are no longer necessary; IP PABX vendors can now upgrade existing handsets by adding a simple black box between the handset and data plug. This reduces the capital cost of a VoIP upgrade and may go some ways towards increasing customer concern over throwing out hundreds of perfectly good handsets.
Because VoIP adoption will be closely tied to the end of existing PABXes' lifecycles, analysts are forecasting steady but moderate growth for the IP telephony hardware market. IDC anticipates regional demand in China, Korea and Australia will propel the Asia-Pacific IP telephony hardware market to US$4 billion by 2005-up from around US$600 million in 2000.
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