Five Reasons VoIP Growth is Slowing (or is it?)

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Is the VoIP market slowing or is it just perception? Is the VoIP market growing?

I have been engaged in a slew of discussions over the last few days as to where or not the VoIP industry is growing or slowing based on a variety of reports that have been released by industry analysts over the last few weeks.

The conflicting reports, originally brought to my attention by Nicole Schuman, has know been the topic of discussion during numerous internal, vendor and media conversations. I have talked to lots of confused people in and around the industry, but I am not.

Here is why (and what is really happening):

1. Most markets do not experience double or triple digit growth forever - We aren’t trading barrels of oil. A slow down was inevitable at sometime, but the overall size of the market is getting bigger.
2. Residential VoIP adoption is slowing - This next wave of consumer is not focused on price savings as their predecessor was. They want to make educated decisions about a quality, reliable service. In this, the industry has some ground to gain as we haven’t done a great job on any of those three points. Hesitant consumers equals sagging sales.
3. Business customer profiles are changing - With this second wave, the business profile is changing. These new prospective purchasers are larger, less willing to take chances and in need of more education and hand holding than the first wave. New needs requires new strategies and time to develop and implement, which usually results in a lag.
4. Product and service offerings are stagnant - There has been a real lack of innovation within the VoIP hardware and service spaces. A lot of the buzz and attention has faded. There are few very new “business drivers” coming out.
5. People are fearful of a recession - I don’t think we are in one, but I’m not an economist.

The VoIP will continue to grow (year over year, maybe not quarter over quarter) for the next 5 to 10 years before anyone needs to worry about jumping ship, however the glory days are over. The days of easy sales and growth by wave riding are nearing an end. The customer types are changing and this is creating longer sales cycles (as well as a need for more education, training and “hand holding” of customers). These longer sales cycles are effecting the business cycles of companies, throwing off some of their growth.

The VoIP market isn’t in the toilet and it isn’t in a downward spiral; it just isn’t the same as it was one, two or three years ago (and this is a good thing). Today, the customers are larger, the profit margins greater, but the effort required in order to win these customers is different and greater than what they use to be. A stumble last quarter is a reflection of this and I predict a strong third and fourth quarter will signal that the industry has taken the necessary steps to adjust to the changing demands of these new customers because the industry and the overall market is growing.

If your reading this and you are not sure what to do next to protect yourself or your business in the face of a changing (or slowing based on how you see it) VoIP market, tune in tomorrow for some advice.