SOURCE: Competitive Telecom Solutions

November 01, 2006 10:00 ET

Software Overtakes Hardware in Enterprise Communications Platform Pricing

Competitive Telecom Solutions Finds Purchase Price of Communication Systems Increasingly Driven by Software Components

UNION, NJ -- (MARKET WIRE) -- November 1, 2006 -- The market shift from traditional TDM technology to IP-based platforms has been accompanied by a changing valuation of the software and hardware that make up enterprise communication platforms.

"In the TDM era, the respective contributions of hardware and software to the end-user purchase price was very stable," remarks Clark Okun, a partner at New Jersey-headquartered Competitive Telecom Solutions. "In the fourteen years that our databases have been tracking Customer Premises Equipment (CPE), hardware has been the dominant contributor to purchase price. In the new IP era, this has completely reversed. Now, software is king."

With TDM systems, hardware components typically accounted for 75% of the purchase price, with software making up the remaining 25%. With today's converged systems, core call control and management software now drives 65% of the purchase price.

"This increase in software contribution is directly attributable to the fact that software applications -- not hardware -- are now the primary market differentiator for communication systems," adds company founder Marcel Tesse. "Based on our tracking and analysis of end-user pricing, it is clear that this is a major shift. Any significant market event brings risk as well as upside gain, and we are advising our manufacturer and channel clients that decisive action is required to capitalize on the many market potentials."

About Competitive Telecom Solutions (CTS)

CTS is an independent and unbiased provider of detailed, up-to-date intelligence on voice and data business communication systems, networks and devices. CTS has developed and maintains one of the largest independent databases of pricing and feature/functions for communication platforms in the United States and Europe. Two of CTS' flagship products, InfoComp and InfoComp Enterprise, provide manufacturers, channels, and enterprises with competitive information on communication feature functionality, as well as system design and pricing. For further information, visit http://www.ctsga.com

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