Small and medium businesses -- companies with up to 999 employees -- in the United States have been slow to adopt converged communications. However, this trend looks likely to change this year, according to a market demand study by AMI-Partners. The industry analysts estimate the total SMB U.S. IP communications and managed services opportunity to be over $30 billion in 2007 and growing at a CAGR of 15.6 percent through 2010.

This market include managed IP-PBX, managed security, managed backup/business continuity, managed networks, VPNs and web hosting in the U.S. SMB space. The study provides an in-depth view of the SMB needs assessment, propensity to buy, and vendor preferences for these value-added solutions in the U.S.

"SMBs are migrating toward converged communications solutions over a single IP network for voice, data, video to support ubiquitous communications, and outsourcing processes which their internal IT staff are unable to manage, says Sanjeev Aggarwal, AMI’s New York-based Vice President for SMB Infrastructure Solutions.

"The SMB IP communications market is sizzling, leading to increased interest and competition from global and regional voice/data vendors, software vendors, internet/portal vendors, and large traditional telecom service providers. In addition to voice communications solutions, over the past few years telecom service providers have started to offer an expanded bundle of complementary services—Internet connectivity and managed services, including security, online backup/business continuity, web hosting and e-commerce, hosted e-mail and collaboration solutions, and hosted applications and databases," Mr. Aggarwal says. "However, no single dominant vendor has yet emerged in this rapidly evolving space."

In the absence of any single dominant players or offerings, SMBs are going ahead and adopting a mix of IP communications products and managed services in a best-of-breed manner to meet their immediate needs.

Some of the key findings from the report include:

IP Telephony

• US SMB IP-PBX shipments now exceed traditional TDM-PBX (including key systems) systems.
• IP-PBX penetration among US MBs rose from 20% in 2005 to 25% in 2006.
• Hosted VoIP penetration, currently under 5% of US SMBs, is now entering a high-growth phase that will drive SMB productivity well into the next decade.
• Collaborative communications such as webcasting, calendaring and scheduling are now being used by over 15% of US SMBs.
• Skype has become a convenient communication tool for quick long-distance chats and is being used by over 5% of US SMBs.

Managed Services

• With in-house IT staff busy addressing basic break-fix issues, both SBs and MBs are looking to outsource non-core IT services.
• Key functions outsourced to managed service providers are security, backup/business continuity, network management, e-mail services, web-hosting, applications and database hosting, and IT Infrastructure management.
• Over 10% of U.S. SMBs now use a managed firewall service and over 15% are using managed VPNs.
• The opportunity for online/off-site data storage and backup is also increasing, driven by business continuity and disaster recovery needs, and has risen to 11% among SBs and 15% among MBs.

About the Study

AMI-Partners' "2006-2007 U.S. Small and Medium Business Telecom/IP Communications and Managed Services Market Assessment" report, authored by Sanjeev Aggarwal and Deepinder Sahni, details major industry and end-user trends and spending forecasts in various sectors of the telecom/IP communications industry, including Internet solutions, and IT and application outsourcing services.

The presentation of findings is highly granular, with data broken out by employee size (1-4, 5-9, 10-19, 20-49, 50-99, 100-249, 250-499, and 500-999), and by vertical industries (AMTUC, manufacturing, wholesale, retail, FIRE, professional business services and other services).

The report also highlights key industry dynamics affecting the competitive landscape. Vendors highlighted in the report include: Equipment vendors: Cisco, Nortel, Avaya, 3Com, Mitel, ShoreTel, Alcatel, Siemens Communications, Polycom, Digium, Aastra, Adtran, NEC, Samsung, Panasonic, Toshiba and others; Software vendors: Microsoft, Digium and others; Hosted VoIP vendors: Covad, 8x8, Cbeyond, M5 Networks, Speakeasy, Apptix, Aptela and others; Service providers: AT&T, Verizon, Qwest, Sprint/Nextel, XO Communications, Comcast, Time Warner and others; Mobile service vendors: AT&T, Verizon Wireless, Sprint/Nextel, T-Mobile and others.

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