Enterprise Voice Market Review: Focus on the Leading Competitors

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Enterprise Voice Market Review Focus on the
Leading Competitors

• Allan Sulkin
• TEQConsult Group
• www.teqconsult.com

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IntroductionIP Telephony Market is Moving
Forward
TEQConsult Group

• IP Telephony (IPT) systems dominate domestic
  market for PBXs
• 95 total system shipments are an IPT platform
• 58 total 2006 line station shipments were IP
  endpoints
• Client/Server closing in on Converged as most
  popular IP-PBX design demand for IP-enabled
  offerings is rapidly declining
• Key/Hybrid market segment a relatively equal mix
  mix of traditional digital and IPT designs
• 16 total 2006 line station shipments were IP
  endpoints
• Sizable number of small system customers with IPT
  requirements are replacing their installed
  Key/Hybrids with offerings classified as IP-PBXs
  by their supplier

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TEQConsult Group
Source TEQConsult Group, 2006 ECA CCS Market
Report
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TEQConsult Group
Source TEQConsult Group, 2006 ECA CCS Market
Report
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TEQConsult Group
Source TEQConsult Group, 2006 ECA CCS Market
Report
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2006 CPE Market Share(Total Line Station
Shipments, USA)
TEQConsult Group
Source TEQConsult Group Estimates
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Focus on Leading Enterprise Voice Communications
Market Competitors

• Avaya
• Cisco Systems
• Nortel
• NEC Unified
• Siemens Communications
• Mitel Networks
• Alcatel-Lucent

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Installed Base CPE Market Share ( Total Line
Stations, USA)
TEQConsult Group
Source TEQConsult Group Estimates
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Global Enterprise Voice Communications Market
Revenues
Source Corporate Financial Filings, TEQConsult
Group estimates
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IP Telephony System Offerings
TEQConsult Group
Competitor IP Enabled Converged Client/Server
Avaya IP Office Communications Manager
Nortel BCM 50/200, CS 1000M CS 1000E CS 2100
Cisco UCME, UCM
NEC IPK Elite, NEAX 2000 IPS, NEAX2400 IPX SV 7000/MPS
Siemens HiPath 3000/4000 HiPath 8000
Mitel 3300 ICP
Alcatel OmniPCX Office OmniPCX Enterprise
Standard Configuration Design
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USA Market Coverage/Presence
TEQConsult Group
Competitor lt40 stations 40-99 stations 100-399 stations 400-999 stations 1000 stations
Avaya
Nortel
Cisco
NEC
Siemens
Mitel
Alcatel
Current Market Share Estimates Very Strong
(gt10) Strong (5-10) Moderate (2-5)
Limited (lt2)
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Rating The Leading Competitors
TEQConsult Group
Voice/Msg Systems IT Infra-Structure Contact Center Solutions Unified Comm. Support Services
Avaya Very Strong OEM Very Strong Strong Very Strong
Cisco Strong Very Strong Strong Strong Strong
Nortel Very Strong Very Strong Very Strong Very Strong Strong
NEC Very Strong Strong Mod. Strong Mod. Strong Strong
Siemens Strong OEM Very Strong Very Strong Very Strong
Mitel Strong OEM Strong Strong Mod. Strong
Alcatel Strong Strong Very Strong (Includes Genesys) Very Strong Moderate
Market Leader
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Avaya
TEQConsult Group

• Recent management organization restructuring with
  many new top executives lacking market space
  experience
• Strongest product/applications/services portfolio
• Entire organization highly focused on enterprise
  communications market by far the strongest
  direct sales/service channel among all domestic
  competitors
• Prices traditionally on high side, but improving
• Unfocused marketing messages
• Working relationship issues, e.g.,
  communications, with customers and consultants
  has hurt market growth

Outlook
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Cisco Systems
TEQConsult Group

• Major strides in a few short years to emerge as
  top tier voice communications system supplier
• Very successfully leverages IT infrastructure
  dominance to market/sell voice offerings
• Deep financial pockets and energetic management
  organization
• Some core system product feature/function gaps
  still remain
• Still playing competitive catch-up in some
  application areas (high end contact center,
  messaging, unified communications)

Outlook
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Nortel
TEQConsult Group

• Major executive management overhaul brought in
  many industry outsiders with little or no voice
  market experience
• New emphasis on customer support services as
  revenue generator (partially tied to MSFT
  relationship)
• Outsourcing most non-core system product
  development telephone instruments, contact
  center, messaging, unified communications
• Strong MSFT relationship (ICA) will likely help
  competitive market positioning in short term, but
  hurt in long term
• Renewed SMB emphasis offset by recent downturn in
  large system market results
• Dealer channel loyalty can turn into a major
  problem issue

Outlook
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NEC Unified
TEQConsult Group

• Techno-centric organization that needs more (or
  at least some) marketing pizzazz last great
  product launch effort was 1983 NEAX2400 intro
• Strong product portfolio from very small to large
  line size market with right mix of
  direct/indirect distribution channels for sales
  and service support
• Growing SMB shipments have been offset by
  declining large system shipments
• Applications development requires greater
  attention, particularly unified communications
  solutions

Outlook
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Siemens Communications
TEQConsult Group

• Operating as an independent entity since Siemens
  AG dissolved its Siemens Communications Group
  late last year semi-limbo state until a
  partner is found
• Exclusive enterprise communications market focus
  should help product development and marketing
  efforts
• Euro-centric approach to global market has
  handicapped North America market position for
  many years
• IP telephony system product delays have hurt high
  end sales results and forced organization to play
  catch-up mode with strategic competitors
• Stronger market coverage (SMB product offerings
  and wider distribution network) needed to
  increase total CPE market share

Outlook
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Mitel Networks
TEQConsult Group

• Currently in transition mode operating as
  semi-public company awaiting IPO first announced
  last year
• Has effectively competed against companies
  several times its size, but with limited historic
  presence in high end of market SMB market niche
  player tag still attached
• Recent focus on higher end of market supported by
  latest 3300 ICP product release, but far greater
  customer/dealer service support resources are
  needed to be competitive
• Relatively strong applications offerings, with
  emphasis on MSFT relationship, but limited
  market share of contact center and unified
  communications sectors

Outlook
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Alcatel-Lucent
TEQConsult Group

• Alcatel Lucent assimilation will take time,
  with little effect on near term dismal North
  America enterprise market results
• Corporate focus appears to be on carrier and
  wireless markets with enterprise communications
  lost in the mix
• Strong product and application solution
  offerings, but vastly improved distribution
  channel network and associated support services
  are needed to boost IPT system sales
• Marketing efforts have been lackluster, to say
  the least, with insufficient support structure
  weakest analyst and consultant programs among top
  tier competitors

Outlook
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TEQConsult Group
Another Ratings View Society Of
Telecommunications Consultants (STC) 2006
Perception Survey
System Supplier ( Survey Citations) IP Telephony System Applications Portfolio Support Services Working Relationship Consultant Program TOTAL

Avaya (42) 4.40 4.45 3.85 3.59 3.93 20.22
Cisco (42) 3.95 3.86 3.73 3.80 4.19 19.53
Nortel (42) 4.00 3.86 3.74 3.79 4.00 19.39
NEC (40) 3.78 3.55 3.65 3.98 4.10 19.06
Siemens (42) 3.81 3.93 3.34 3.79 4.14 19.01
Mitel (40) 3.87 3.63 3.53 3.63 3.91 18.57
ShoreTel (33) 3.73 3.33 3.06 2.91 2.76 15.79
Alcatel (34) 3.32 3.09 2.76 2.76 3.00 14.93
Inter-Tel [phone].09 13.61
3Com (33) 2.94 2.73 2.61 2.61 1.97 12.86
Ericsson (32) 2.41 2.38 2.28 2.31 1.94 11.32
1 Negative 2 Slightly Negative 3 Neutral
4 Slightly Positive 5 Positive Survey
created, conducted and tabulated by TEQConsult
Group, November 2006
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Future Strategic Competitors
TEQConsult Group

• There are many potential competitors who can
  upset the current enterprise communications
  market equilibrium
• Current peripheral market players, e.g.,
  Microsoft, IBM HP
• Current alternative solution players, e.g., ATT
  Verizon
• Current non-players with the potential to enter
  the market, e.g., Nokia, Oracle Google

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Microsoft The Next Cisco Systems?
TEQConsult Group

• Microsoft has been on the periphery of the
  enterprise communications market for many years,
  but now appears ready to make a big move
• Upgraded unified communications solutions
  integrate VoIP and telephony with existing
  Microsoft Exchange Server and Live Communications
  Server (LCS) architectures
• Promises to offer a seamless communication
  experience for end users with single login access
  
• Microsoft/Nortel Integrated Communications
  Alliance (ICA) and numerous business partner
  agreements with most of the other leading IPT
  system suppliers focusing on LCS/Office
  Communicator solution
• LCS/Office Communicator poses future threat to
  fully replace voice-centric IPT systems

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Hosted/Managed IPT Systems Alternatives to
Traditional CPE
TEQConsult Group

• Hosted IPT systems were based on softswitch
  solutions using third party components (software,
  server, media gateways, telephone instruments)
• Spearheaded by independent service providers, but
  only ATT and Verizon can drive future market
  direction
• Primarily targeted today at SMB customers as a
  CPE alternative
• Traditional CPE suppliers have also entered the
  market with hosted/managed offerings of their IPT
  system solutions
• Hosted Mitel 3600 Hosted KTS Avaya on Demand
  Siemens HiPath 8000 Cisco Unified Call Manager
• Premises-managed NEC Univerge MPS MIPT Alcatel
  OmniPCX Office

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Closing Comments
TEQConsult Group

• The IP telephony market is entering its mature
  phase with an increased emphasis on applications
• Market demand for IPT systems will remain
  moderately strong with
• Customers replacing KTS/Hybrids with more fully
  featured PBX solutions
• Alternative network solutions posing a threat to
  continued growth
• New competitors are certain to enter market from
  peripheral product/service markets that are
  quickly converging with traditional enterprise
  voice systems
• Wireless technology will replace desktop wired,
  and virtual communications systems will blur
  distinctions between premises/network and
  business/consumer markets

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TEQConsult Group
Thank You for Your Time Audience
Questions? Allan Sulkin amsulkin_at_aol.com www.teq
consult.com