During the first quarter of 2014, total Enterprise Telephony revenues declined 10% sequentially. The market is continuing to shrink due in large part to the secular decline in premise-based equipment.
This trend was compounded by corporate transitions at three of the largest seven vendors. The various corporate transitions are likely to continue to put downward pressure on the market throughout the rest of the year. The premise-based PBX market will likely be the hardest hit.
To offset the declines in premise sales, many vendors are continuing to push their cloud offerings. For example, ShoreTel and Mitel’s cloud offerings are up significantly while their premise businesses are declining. Other vendors are also experiencing similar trends.
We believe that the market transition to Cloud will play out differently for small and large businesses. While small businesses will likely adapt cloud solutions more widely because IT is not a core competency, larger businesses have the internal IT resources as well as different sets of requirements that are better suited to premise-based solutions.
We plan to discuss the Cloud’s impact on the Enterprise Telephony market in our July Five-Year Forecast Report that we are publishing this month!