Limited Budgets Driving Small and Medium-sized Enterprises toward Hosted IP Telephony

Palo Alto, Calif. — June 4, 2008 — The availability
of hosted Internet Protocol private branch eXchange (IP PBX) or hosted
IP Centrex services has increased manifold in the last 24 months,
stimulating its adoption among enterprise customers in North America.
The increase in competitive intensity has also forced vendors to carve
various niches to generate higher profitability. Simultaneously,
vendors are enhancing their offerings, expanding distribution channels,
as well as investing resources in generating brand awareness.

New analysis from Frost & Sullivan (http://www.enterprisecommunications.frost.com), North American Hosted IP Telephony and VoIP Access Service Markets, finds that the number of users is likely to increase from 860,000 in 2007 to nearly 4 million in 2013.

If you are interested in a virtual brochure, which provides
manufacturers, end users, and other industry participants with an
overview of the North American hosted IP telephony and voice over Internet Protocol (VoIP) access service markets, then send an e-mail to Mireya Castilla, Corporate Communications, at mireya.castilla@frost.com,
with your full name, company name, title, telephone number, company
e-mail address, company website, city, state and country. Upon receipt
of the above information, an overview will be sent to you by e-mail.

"Hosted IP telephony and VoIP access services provide enterprises
with an advanced telephony solution without the capital and operating
expense associated with expensive network upgrades," notes Frost & Sullivan Program Manager Imran Khan. "Apart from the capital and
staffing-related cost savings associated with hosted IP telephony,
enterprise customers are also able to benefit from the business
continuity capability inherent in hosted or network-based
telecommunication solutions."

The lack of hefty capital investment budgets on the part of many
small and medium enterprises (SMEs) will be the key driver for the
North American hosted IP telephony and VoIP access service markets.
These enterprises are increasingly looking to reap the benefits of
IP-based services and hosted IP telephony that enable them to utilize
telephony capabilities that are at par with large enterprises, at only
a fraction of the cost.

However, the lack of in-house IT staff in SMEs can also delay the
adoption of advanced/new IT/telecom solutions. The lack of IT personnel
can often lead to limited understanding and awareness of various
technology solutions, as smaller entrepreneurs struggle to address core
operating challenges such as workforce management.

"Negative perceptions surrounding traditional Centrex services are
also likely to impact the overall enterprise attitude toward hosted IP
telephony during the next year or so, thereby restricting adoption,"
says Khan. "Vendor reliability concerns will also prevent several
enterprises, specifically within the medium and large enterprise
segments, from adopting the solution."

Overall, the key success factors for hosted IP telephony VoIP access
providers have not changed much over the past 12 months or so. Service
quality, reliability, provisioning, pricing, and feature diversity
still remain the leading vendor evaluation criteria for enterprises
seeking such solutions.

North American Hosted IP Telephony and VoIP Access Service Markets is part of the Enterprise Communications Growth Partnership Service program, which also includes research
services in the following markets: Enterprise vertical markets,
Enterprise product penetration and spending trends, and Enterprise
telephony solutions. All research services included in subscriptions
provide detailed market opportunities and industry trends that have
been evaluated following extensive interviews with market participants.
Interviews with the press are available.

Frost & Sullivan, the Growth Partnership Company,
partners with clients to accelerate their growth. The company's TEAM
Research, Growth Consulting and Growth Team Membership empower clients
to create a growth-focused culture that generates, evaluates and
implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000
companies, emerging businesses and the investment community from more
than 30 offices on six continents. For more information about Frost & Sullivan's Growth Partnerships, visit http://www.frost.com.