Worldwide sales of PBX and IP PBX extensions (excluding Micro PBX products) declined by 30% in this period compared to the same period in 2008. In total just under 11 million extensions were supplied, compared to a volume of more than 15 million extensions in Q1 2008. Many vendors are upbeat about the prospects for Q2 2009, however in reality we are unlikely to reach the types of shipping volumes recorded in the early quarters of 2008 for the remainder of 2009.
No region escaped the knock on effects of declining customer confidence and challenges obtaining finance. Eastern Europe recorded the heaviest decline, with volumes in Q1 2009 down more than 50% compared with Q1 2008. This was in part influenced by notably poor performance in both Russia and Ukraine. The Latin American, North American and Middle East and African markets all also declined by more than 30%. APAC and Western Europe faired slightly better with declines of 26% and 23% respectively. Within Western Europe the UK, which is one of the markets that is most heavily reliant on two-tier distribution for PBX, dropped by 37% and was by far the worst performing market of the ‘Big Three’, namely Germany, France and the UK.
In terms of segmentation, as had been anticipated, in Q4 2008 the largest impact of the economy was felt in segments addressing less than 100 extensions, with the above 100 extension segment being relatively unscathed. This reflected the much shorter sales cycle in the SME segment and the immediate effects as indirect distribution channels quickly addressed declining new business, high stock levels and looked to reduce inventory. The longer sales cycle in the enterprise segment has meant that the full impact of the economic turmoil which raised its head in earnest early in Q4 2008 had been delayed until Q1 2009 and is likely to continue to impact through 2009.
In Q1 2009 the greatest declines were still witnessed within segments addressing less than 100 extensions, but notably a decline of more than 25% was also witnessed in the segments addressing more than 100 extensions, when compared with Q1 2008.
Overall, the IP extensions market shrank by 15% compared to Q1 2008 as all regions recorded declines. The Below 100 Extensions market only decreased by 9%, however, while the Above 100 Extensions segments declined by 17%.
Despite the overall volume decline, IP desktop penetration into total extensions continued to increase, with penetration of IP desktop reaching 26% in Q1 2009 compared with 22% in Q1 2008. North America still leads IP desktop penetration, followed by Western Europe.
Vendor Performance
All the top ten global PBX/IP PBX vendors suffered declines in shipments in Q1 2009 of between 20% and 50% when compared with Q1 2008. Cisco’s performance faired better than many of the leading vendors and they retained the number 1 spot in terms of total extensions shipped in Q1 2009, which they had first attained at a global level in Q4 2008. Cisco’s business remains more weighted to larger installations and therefore the very dramatic declines in the less than 100 extension space have not impacted their business as greatly as some of their competitors who are more reliant on this segment.
NEC reclaimed the number 2 position in Q1 2009, followed by Avaya in third position. Siemens, Panasonic and Alcatel-Lucent claimed 4th, 5th and 6th positions in terms of total extensions shipped in Q1 2009. Panasonic who had attained global market leadership in the first 3 quarters of 2008 and whose business is weighted by very strong SME business, was adversely affected as their historically strong market volumes in Eastern Europe and Middle East and Africa dropped significantly in Q1 2009. Both Siemens and Alcatel-Lucent, despite claiming the number one and two spots in EMEA, have weaker positions in North America and therefore struggle to gain a top 3 position at a global level.
When evaluating specifically vendor positions for IP desktop extensions, Cisco’s global market leadership continues, but the dynamics for number two and three spots change, with Avaya claiming the number 2 position and Mitel the number 3 position in Q1 2009.