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Not many industries are enjoying good times thanks to the global economic downturn. And the recession seems to be impacting another market, this time the service provider VoIP equipment market.

According to communications market research firm Infonetics Research, the service provider VoIP equipment market dipped 29 percent to $600.4 million in worldwide revenue during the first quarter. That figure is down 33 percent from the first quarter of 2008.

 

What’s more, the report found that no product segment or region was immune to declines in the service provider VoIP equipment market, which experienced the sharpest quarterly decline ever. While declines in the service provider VoIP market are expected for the remainder of the year, there will be pockets of growth in certain areas largely driven by large carriers, the report states.

 

The one silver lining was the media server segment. Worldwide revenue in that category declined just 7 percent, but is up 19 percent year over year, the report said.

 

Diane Myers, directing analyst, service provider VoIP and IMS for Infonetics Research (News - Alert), attributed “rough first quarter” largely to the recession, adding that service providers are putting VoIP equipment purchases on hold because of economic conditions. Those findings, shown in the chart below, are similar to an earlier report from Infonectics, which indicates that the carrier VoIP equipment market declined for the first time ever in 2008 by nearly six percent, TMC (News - Alert).net reported.

 

It’s a reflection of an ongoing issue in the VoIP market. As TMCnet reported last fall, global sales of IP phone gear to service providers fell eight percent to $861 million in the second quarter of 2008 compared to a year earlier. The decline from the first quarter of 2008 was steeper still at 10 percent. Still another report by Infonetics said that the impact would likely be temporary.

 

Meanwhile, IMS deployments seem to be gaining traction. Worldwide sales of IMS (IP multimedia subsystem) equipment, including HSS (home subscriber servers), CSCF servers, and voice application servers, are forecast to jump 74 percent in 2009, the report said. The IMS equipment market had a healthy first quarter with $63.7 million in revenue.

 

Ericsson, Alcatel-Lucent, Nokia (News - Alert) Siemens, and Huawei lead the way with core IMS equipment, according to Infonetics’ report.

 

Not surprising, the EMEA region (Europe, Middle East, Africa) is expected to continue to lead the number of IMS deployments through 2009. Meanwhile, Asia Pacific has the single largest IMS deployments and will take the helm in IMS equipment spending in 2010 as China operators are expected to boost IMS networks, the report found.

 

“We are beginning to see a noticeable shift in spending from stand-alone VoIP networks to IMS deployments,” Myers said in a statement. “While the core IMS equipment segments, CSCF and HSS, are still small compared to the service provider VoIP market, deployments remain strong in EMEA and Asia Pacific. “

 

While IMS deployments continue to grow in all regions, challenges still remain, Infonetics said. They include interoperability issues, complicated deployments, and steep price competition.

 

Infonetics' service provider VoIP report tracks Acme Packet, Alcatel-Lucent, AudioCodes, BroadSoft, Dialogic, Cisco, Comverse (NetCentrex), Ericsson, GENBAND, Huawei, Italtel, MERA, MetaSwitch, Movius (News - Alert), Nokia Siemens, Nortel, RadiSys, Sonus, Thomson Cirpack, UTStarcom, Veraz, Verso, and Xener, among other companies. The report offers worldwide and regional market share, market size, forecasts through 2013, and analysis for VoIP subscribers and media processing and call control carrier VoIP equipment.