How Big is Hosted IP Telephony Business?

Shoretel is acquiring hosted IP telephony provider M5 Networks, allowing Shoretel to offer its potential customers either hosted or premises-based business voice services.

A recent report by Gartner shows the IP voice-as-a-service market growing at a 36 percent compound annual growth rate in North America through 2015 to $2.2 billion.

That is worth putting in perspective. By 2015, total U.S. telecom industry revenue might be $337 billion. If that turns out to br correct, and the Gartner forecast also proves substantially correct, then hosted IP telephony would represent less than six tenths of one percent of U.S. industry revenue, being generous.

Keep in mind that the Gartner forecast is for all of North America, so Canadian revenues would have to be backed out of the $2.2 billion figure. 

That makes hosted IP telephony an important revenue stream for some providers, but insignificant from an industry-wide perspective. To a large extent, hosted IP telephony is a product of high relevance for firms that sell to small and mid-sized businesses, with some partial-deployment use cases for enterprises.

On the other hand, one frequently has to separate out the various components of IP telephony spending by enterprises and smaller businesses, as a good portion of the IP voice business consists of spending on access services such as SIP trunking or managed PBX services, not just "hosted IP telephony," as this chart from Infonetics suggests. 

The other caveat is that sometimes unified communications is used to describe revenues that might legitimately be called either "unified communications" or "hosted IP telephony." In fact, though gross revenues might be increasing, the percentage of total spending by businesses on hosted IP telephony might shrink, as a percentage of total, between now and 2015 or 2016.