Q3CY09 Shipment Results for Telephony Systems Looking Good: Strong Showings by Cisco and AvayaQ3CY09 Shipment Results for Telephony Systems Looking Good: Strong Showings by Cisco and Avaya

For the second straight quarter, total market shipments have increased, following two quarters of substantially declining shipments.

The third quarter shipment reports are in from the leading enterprise communications systems suppliers and the trend is looking good, because line shipments are up for most vendors on a quarterly basis. This is the second straight quarter total market shipments have increased after two quarters of substantially declining shipments.The two market leaders, Cisco and Avaya, reported double digit growth in North America and globally for the quarter. Though Avaya narrowed the gap between itself and Cisco during the first half of the year, a very strong third quarter by Cisco will keep the system supplier in first position for North American system for the year unless something unforeseen happens this quarter. The two competitors are in very close battle for the global leadership position, though, and the difference between them is looking like it will be less than 1 percent share. The race next year will not be as close when Avaya has the added benefit of Nortel shipments (which are declining at an accelerated rate, see comment below).

Siemens and NEC results were also positive on a quarterly basis, though Mitel and Alcatel Lucent were down slightly for the quarter. The Siemens rebound was to be expected, because the Gores Group investment in the system supplier alleviated major concern regarding its future viability following the Siemens AG decision to pull back from the market more than two years ago.

Nortel's quarterly shipments, as expected, declined for the quarter and were off 45% from the previous year's total. It will be interesting to see the system supplier's fourth quarter results to see how low they can go. Until Avaya presents its roadmap for Nortel's products sometime early next year, customers are abandoning the Nortel ship due to the uncertain future of the products.

It appears that annual shipments will decline from the 2008 total, but will not be as bad as feared following first quarter results. We are likely looking at a 10%-15% annual decline compared to 2008 after final fourth quarter results are posted. On a happier note, the forecast for 2010 is positive, though shipment totals will probably not rebound to the 2008 level. This year's totals will not be available until mid-February, at which time I will present my annual market share estimates. I don't expect major changes from my mid-year article, but one can never speculate without a warning to be prepared for the unexpected.For the second straight quarter, total market shipments have increased, following two quarters of substantially declining shipments.