SOURCE: Synergy Research Group

November 14, 2006 14:34 ET

Milestones and Surprises in the Q3 06 Telephony Market

Enterprise IP Telephony Grew 23.7 Percent Year-Over-Year & 9.1 Percent Sequentially

RENO, NV -- (MARKET WIRE) -- November 14, 2006 -- According to a recently published report by Synergy Research Group, the worldwide Enterprise IP Telephony market reached two significant milestones in the quarter: Cisco shipped its 10 millionth IP Phone and Cisco and Avaya each shipped their 10 millionth Enterprise IP Telephony line -- an indication of how quickly IP Telephony has reshaped the Enterprise Voice market.

Q3 2006 was dominated by the heavyweights Avaya, Cisco, and Nortel. However, there were some interesting regional dynamics. In the U.S., Cisco's sales dipped in the face of strong increases by both Avaya and Nortel. In APAC, where Avaya experienced strong double-digit increases, Cisco had flat sales. Additionally, 3Com also experienced strong gains in APAC, while benefiting from the synergies of 3Com and H-3C. Also of interest, NEC, Toshiba, and ShoreTel moved into the top 5 rankings of several U.S. Enterprise IP Telephony segments.

"The competitive pressure in the Enterprise Telephony market is not easing up," said Ryan Olsen, Analyst at Synergy Research Group. "We saw some aggressive marketing in the quarter which resulted in successful gains for some vendors. On the other hand, this was not the best quarter to be a smaller vendor as some showed considerable strain from the competitive nature of the market."



Table 1. Q3 2006 U.S. Enterprise IP Telephony Market Shares
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          Position        Q-Q Growth

Cisco     1               - 7 %

Avaya     2               + 8 %

Nortel    3               + 21 %

Toshiba   4               + 14 %

NEC       5               + 41 %


Table 2. Q3 2006 U.S. IP Phone Market Shares
--------------------------------------------
          Position        Q-Q Growth

Cisco     1               - 12 %

Avaya     2               + 4 %

Nortel    3               + 20 %

Toshiba   4               + 21 %

Shoretel  5               - 4 %
Synergy measured sequential decreases in PBXs for the quarter at - 6.3 percent and a sequential increase in Key Telephone Systems (KTS) of + 2.8 percent. Synergy believes the staying power of KTS is an indication that IP Telephony continues to struggle with SMB market penetration. Until IP Telephony finds a way to become more attractive to smaller organizations, KTS sales should remain stable.

About the Reports

Synergy's Q3 2006 Enterprise VoIP Market Share reports are available for purchase at www.srgresearch.com or by contacting Heather Wilson at 775-852-3330. Synergy provides separate Market Share and Forecast reports for Enterprise VoIP for Worldwide, U.S., EMEA, UK, APAC, and LAM regions.

About Synergy Research Group

Synergy Research Group is regarded as the definitive authority for networking and telecom market research by Wall Street firms, leading equipment vendors, and component manufacturers. Synergy can be found at www.srgresearch.com

The contents of this press release represent SRG's interpretation and analysis of statistics and information collected from authorized company representatives, industry sources, and SRG estimates. SRG does not guarantee the accuracy or completeness of the statistics or information contained in this release.

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