Cisco the Big Winner in 2008 CPE Market Share RaceCisco the Big Winner in 2008 CPE Market Share Race

The data is in and Cisco Systems is the clear winner according to TEQConsult Group’s 2008 US market share estimates for total Customer Premises Equipment (CPE) line station shipments. Cisco shipped about 40% more line stations than either of its closest competitors, Avaya and Nortel, who in turn were comfortably ahead of their closest competitors, NEC Unified and Mitel Networks.

Cisco shipped more than 2.85 million line stations; Avaya and Nortel each shipped more than 2 million stations; and NEC and Mitel each passed the 1 million line station level. The remaining system suppliers rounding out the Top 10, in descending order, are Siemens Enterprise Communications, Toshiba, Panasonic, ShoreTel, and Vertical Communications. TEQConsult Group's estimated market shares for the Top 10 are illustrated in the following bar chart:

The estimated US market shares and shipment totals include both PBX (traditional and IP telephony) and Key/Hybrid systems. Estimated total US CPE shipments last year were 13.1 million stations, a 5.75% drop from 2007’s total of 13.9 million. The diagram below illustrates the decline of shipments for both PBX and KTS/Hybrid systems:

Cisco's US line station shipments increased last year by about 7%, despite a 20% decline in Q4 2008 shipments compared to Q3 2008's. It was the first year Cisco did not have a double digit increase since it began reporting detailed line shipment data more than five years ago.

Last year's final quarter also proved to be a downer for the other leading system suppliers, including Avaya, NEC, and Mitel Networks with declines of 17.4%, 24.5% and 5.7%, respectively, compared to third quarter shipments. Although some suppliers had individual excuses for the weak quarter results, such as it being the first quarter of a new fiscal year, there is no doubt that the economy and rapidly declining financial conditions had a measurable negative effect on the market beginning in the late summer months, when orders were starting to be placed for fourth quarter shipments. Note: Nortel's recent global reporting structure (one figure for global shipments of all CPE products) precludes an informed analysis of their US market shipment data results.

Splitting the CPE market into KTS/Hybrid (SME) and PBX (enterprise) segments for individual suppliers is becoming more and more difficult due to the nature of the available reporting data and the design structure of IP telephony systems. Feature/function differences between small and large systems have been declining for many years, and the evolution of IP telephony system design has made the distinction ever more difficult to define.

For example, Cisco's reporting data covers its small (Unified Communications Manager Express) to large IP telephony platforms (Unified Communications Manager), with no breakout of line station data among the platforms. System shipments are provided for each platform, but it would require further information, e.g., mean line stations per platform, to accurately calculate line station shipments per platform.

Similarly, Avaya does not provide breakout data for its IP Office solution, an obvious replacement vehicle for its installed Merlin hybrid solutions. Mitel, too, does not distinguish between its KTS/Hybrid and PBX platforms in its reporting data. Nortel used to provide precise system shipment data for each of its CPE solutions, KTS/Hybrid and PBX, but ceased doing so last year; it now only provides a single figure for global shipments representing all products. Only NEC, among the leading suppliers, provides detailed data breakouts for its PBX and KTS/Hybrid offerings.

A detailed critical evaluation of the industry and its leading competitors will be presented in TEQConsult Group’s annual market review paper scheduled for publication later this month here at No Jitter. I will also be presenting my 19th annual market review and analysis, "IP Telephony Market--Who's Winning and Who's Losing?" at VoiceCon Orlando, where I will offer up-to-date critiques of the system suppliers based on their latest corporate doings and scheduled show announcements.