Entering a New Era of Communications: Preparing Your Organization Amidst a Tumultuous Environment

Entering a New Era of Communications

Preparing Your Organization Amidst A Tumultuous

Environment

Vanessa Alvarez, Industry Analyst

and

Alaa Saayed, Industry Analyst

November 19, 2009

2<GPS>

Agenda

�The State of the Market

�Technology Roadmap

�General Trends

�IP Telephony Endpoint Market

�Conclusion and Recommendations

3<GPS>

Economic Crisis: Factors Contributing to Decline

7.6%8.1%

8.5%8.9%

9.4% 9.5% 9.4%9.7% 9.8%

10.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Source: U.S. Bureau of Economic Analysis

U.S. Unemployment Rate (%)

•U.S. Unemployment Rate: 10%

•GDP: Declined in 2H08 and continued to decline 1H09

•Most technologies had great

earnings for 1H09, but came from cutting, not revenue

growth

4<GPS>

An Economy in Crisis Impacts Adoption of Enterprise Communications

Enterprise Telephony Market: Shipment Forecasts

(World), 2009-2014

40,000,000

42,000,000

44,000,000

46,000,000

48,000,000

50,000,000

52,000,000

54,000,000

2007 2008 2009 2010 2011 2012 2013 2014

-6

-4

-2

0

2

4

6

8

Gro

wth

Ra

te (

%)

units growth rate

CAGR: 3.1%

Un

its

•Enterprises are delaying their purchasing

•Equipment lifetime is beingextended

•IP migrations going forward

will drive growthSource: Frost & Sullivan

5<GPS>

2008-2009 2010-2011 2012-2013

Software based Telephony

Virtualization

Communications

On Demand (Cloud

Computing)

Technology Roadmap: Drivers to Adoption

CaaS

Cost savings; Reduction of on premise hardware

Reduction of physical servers; flexibility;resource efficiencies

Dynamic resource allocation;flexibility; on demand billing

Source: Frost & Sullivan

6<GPS>

IT and Telecom Continue to Converge

Source: Frost & Sullivan

•Amazon

•Google•TerreMark•3Tera

•Cisco

•Avaya•Siemens Enterprise Group•Mitel

7<GPS>

A Market in Convergence: Virtualization

virtualization infrastructure

VM VM VM VM VM VM VM

Oracle SAP Voice VideoFinance App

HR App E-Mail

•The ability to power multiple virtualmachines on one server•Applications can share the necessary

resources on demand• IT environment is moving in this direction

Source: Frost & Sullivan

8<GPS>

A Market in Convergence: Cloud Computing

Infrastructure and Storage

Platform

Application

Services

Clients

Amazon, GoGrid, RackspaceAmazon, GoGrid, Rackspace

Microsoft Azure, Google AppEngine

Infrastructure as a service

Platform as a service

Salesforce.com, Google Apps,IBM’s LotusLive

Software as a service

Source: Frost & Sullivan

9<GPS>

A Market in Convergence: Enterprise 2.0 Has Emerged as the Next Wave of Productivity

Source: Frost & Sullivan

Formal Use of Social Networking/Web 2.0

Initiatives

(N=1439)

57%43%

Yes No

IPT Endpoint Market

11<GPS>

Corded Devices

Cordless Devices

Desktop & Mobile Soft Clients

DECT

PBX System

IP PhonesDigital PhonesAnalog Phones

Digital Deskphones IP DeskphonesAnalog Deskphones

Source: Frost & Sullivan

IP DECT/SIP DECT

Analog Cordless

Mobile FMC Clients

VoWLAN Phones

Single-Mode

Business Communication Endpoints

PC Softphones

UC Clients

IP Devices

IP Clients

12<GPS>

Total IP Endpoint Snapshot

IP Desk

Phones

40.6%

FMC C

24.9%

Cordless IP

Phones

2.6%PC

Softphones

2.4%

UC C

29.5%

2015

Cordless IP

Phones

3.4%

PC

Softphones

7.0%

UC C

3.8%

FMC C

2.4%

IP Desk

Phones

83.5%

2008

19.5 Million 85.0 Million

UC Clients

FMC Clients

2.4%

UC Clients

FMC Clients

FMC Clients: Growth

UC Clients: GrowthIP Desk Phones: Decline

PC Softphones: Decline

Cordless IP Phones: Decline

IP Endpoint Unit Shipment – General Shift from Hardware to Software

Source: Frost & Sullivan

IP Desk Phones: Growth/Maturity

PC Softphones: Maturity/Decline

Cordless IP Phones: Growth/Maturity

FMC Clients: Introduction/Growth

UC Clients: Introduction/Growth

13<GPS>

Integrated, Multi-purpose Endpoints Simplicity + MobilityDiversification

Multiple Types of IP Endpoints Targeted at Different Users & Platforms:

• IP Desk Phones

• Desktop Softphones

• VoWLAN Single-mode

Phones

• Basic UC Clients

• IP/SIP DECT

• Basic FMC Clients

• Basic Headsets

More Intelligent IP Endpoints Integrating Multiple Functionalities:

• Multiuse Headsets

• Advanced UC Clients

• Advanced Mobile Clients

Fewer Devices – With Transformable Form Factors – Simplifying Communications :

• Mobile Communications

Devices with a Desktop

Docking Station

IP Telephony Hype Era

Last 5 to 7 YearsIP Telephony Plateau Era

Present and Next 3 to 5 Years

Future Enterprise Comm. Era

Beyond 5 Years

Total IP Endpoint Trends - Move from Diversification to Integration and

Simplicity

Source: Frost & Sullivan

14<GPS>

Demand Potential: Very Low

Revenue CAGR 2008-2015: (9.6%)

Demand Factors: Absorption of softphone capabilities in advanced UC Clients.

F&S Recommendations: Focus on development of advanced UC clients, the

implementation of various migration programs and campaigns and limit (not

discontinue) the use softphone-only solutions to specific groups (e.g.

telecommuters, SMBs, etc.)

IP Endpoint Opportunity Assessment

PC Desktop Softphones

Demand Potential: Very High

Revenue CAGR 2008-2015: 45.7%

Demand Factors: Continuous investments in development of UC-related

applications, growing number of virtual workers, and adoption of UC clients.

F&S Recommendation: Allocate present resources to enhance UC offerings,

strive for increased partnerships, develop strategic bundling, offer value-added

applications and integrate with Enterprise 2.0 tools.

UC Clients

15<GPS>

VoWLAN Single-mode & DECT Phones

Demand Potential: Medium Shifting to Low within 4 to 6 yearsRevenue CAGR 2008-2015: VoWLAN Single-mode: 20.9%; DECT: 0.7%Demand Factors - Near-to-medium-term: Mainstream adoption of WLAN infrastructure and device penetration into new vertical segments. Demand Factors - Medium-to-long-term: Proliferation of advanced FMC clients. F&S Recommendations: Focus on key verticals, evidence of ROI and application integration.

Demand Potential: Very High

Revenue CAGR 2008-2015: 61.4%

Demand Factors: Growing number of road warriors and mobile workers,

escalating mobile costs, the need for increased productivity.

F&S Recommendations: Allocate present resources on extending enterprise

communications through mobile devices. Offer multiple FMC flavors. Strive for

continued support of mobile operating systems, prosumer device models and

prosumer service delivery methods.

Advanced FMC Clients

IP Endpoint Opportunity Assessment

16<GPS>

Demand Potential: Medium Shifting to Low within 4 to 6 yearsRevenue CAGR 2008-2015: 11.4% Demand Factors - Near-to-mid-term: Decline in price points, adoption of SIP and general productivity gains. Demand Factors - Long-term Demand: Shift from hardware to software.F&S Recommendations: Focus resources on SIP, open-standards phones, and simple and easy-to-use, yet feature-rich devices.

IP Desktop Phones

IP Endpoint Opportunity Assessment

Demand Potential: Medium Shifting to High within the next 3 to 5 Years

Revenue CAGR 2008-2015: 4%

Demand Factors: Need for multi-tasking and device integration

F&S Recommendations: Focus on the development of multiuse wireless

headsets that integrate multiple present IP endpoints and standardize voice

quality across multiple UC apps at the headset level.

Enterprise Headsets

17<GPS>

Strategic Considerations

Increasingly Bet on Open Standards

Develop Mobility Strategies Based on User Based Roles

Source: Frost & Sullivan

Enterprise

Communications

Success

Strategies

Gradually Shift Investment Focus from Hardware to Software

Enterprises must plan a cohesive and holistic IT and communications strategy

Evaluate the lifecycleof equipment, considerhybrid approach

Work with your vendors to ensure interoperability

18<GPS>

Global Perspective

• 1,700 staff across every major market worldwide

• Over 10,000 clients worldwide from emerging to global 1000 companies

19<GPS>

Next Steps

Request a proposal for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. ([email protected])1-877-GoFrost (1-877-463-7678)

Join us at our annual Growth, Innovation, and Leadership 2010: A Frost & Sullivan Global Congress on Corporate Growth, September 12-15 2010, San Jose, CA (www.gil-global.com)

Register for the next Chairman’s Series on Growth: The CEO's Perspective on

Market Research (December 1st) (http://www.frost.com/growth)

Subscribe for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)

20<GPS>

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other? Please inform us by taking our survey.

What would you like to see from Frost & Sullivan?

21<GPS>

For Additional Information

Jake Wengroff

Corporate Communications

Business and Financial Services

(210) 247-3806

[email protected]

Angie Montoya

Global Analyst Briefing Coordinator

Marketing

(210) 247-2435

[email protected]

Elka Popova

Research Manager

Unified Communications

416-495-2699

[email protected]

Craig Hays

Sales Manager

Information & Communication Technologies

(210) 247-2460

[email protected]