The North America small and medium business segment for hosted business-VoIP is set to reach US$416 million this year - from about US$165 million in 2005. Between 2005 and 2010, the cumulative growth rate will cross 56.9%, according to the latest study by AMI Partners Inc.

The market opportunity for hosted business-VoIP solutions for SMBs is huge and growing rapidly - and so is the competition, which is increasing with participation from traditional telecom and cable companies, equipment vendors, and focused complimentary service providers.

There are many drivers that are influencing SMBs to adopt hosted business-VoIP, including predictable monthly voice communications expenses with no up-front capital expense, toll savings for intra- and inter-company long-distance and local calling. “Simple, secure, very reliable, easy-to-use solutions supporting unified messaging and mobility are key for small businesses that never want to miss a customer call,” Mr. Aggarwal says. “Helping SBs appear more professional and larger, especially SBs that have a store presence and web presence.”

AMI-Partners has just published a Telecom/IP Communications focused report – “SMB Interest Perks Up In Hosted VoIP: North America hosted VoIP forecast outlook, needs assessment and positioning implications”. This report provides a comprehensive five-year market forecast and vendor market analysis of the North America hosted VoIP market for SMBs. Some key findings from the reports:

• North American SMB hosted VoIP market spending was US$164.9 million in 2005 and will cross US$1.56 billion by 2010, at a CAGR of 56.8%.
• Hosted VoIP installed seats in the North America SMB market are forecasted to rise from 393,967 in 2006 to about 3 million seats by year 2010.
• The market penetration of hosted VoIP seats will increase from less than 2% in 2006 to over 7% by 2010, with a CAGR of 65%.
• The adoption of hosted VoIP will be particularly high in companies with 10-50 employees.
• Last year, the leading vendors (based on seats) were Covad Communications, XO Communications, Packet8, Cbeyond, and M5 Networks.
• Telcos are not currently marketing VoIP services aggressively to the SMBs because of fears of cannibalizing their customer base and revenues.
• However, as the market growth and adoption rate increase, leading telecom service providers will become more aggressive in marketing VoIP to SMBs.
• Vendors covered in the report include Covad Communications, XO Communications, Packet8, Cbeyond, M5 Networks, AT&T, Verizon, Sprint Nextel, Qwest, Aptela, Speakeasy, Bandwidth.com, and Apptix.

About the Study

These reports highlight AMI’s continued focus through a series of studies published under the recently launched AMI-Partners’ SMB Telecom/IP Communications Service. These reports examine:

• Worldwide PBX (IP and TDM) market opportunity and spending from 2005 to 2010, by SB and MB segments.
• North America PBX (IP and TDM) market opportunity and spending from 2005 to 2010, by SB and MB segments.
• Penetration of Telecommunications products in the SMB market in 2006.
• IP Telephone Dynamic Competitive Environment.
• Worldwide SMB IP and TDM/Key system PBX revenue and market share by vendor.
• US Small Business IP and TDM/Key system PBX revenue and market share by vendor.