5 minute read |

VoIP Market Trends for the Next Few Years

VoIP phone service background

It is amazing to observe how quickly VoIP has grown from a niche tool to mainstream technology. It is an essential service for enterprises of all sizes, hardly the expected outcome when it launched in the 90s. VoIP is the foundation on which next-generation unified communication technologies are built. It is a billion-dollar industry that shows no signs of slowing down in 2018.

VoIP – the Journey from Launch to the Present

Few industries have grown as quickly as VoIP has in the past. It used to be an obscure tool for a few users to make cheap international calls. Today, it plays a crucial role in the communication strategy of any organization. No business can plan for the future without taking VoIP into account. If a company has not already switched to VoIP, they are likely in the process of upgrading.

Individuals and households were the first to try out VoIP. Businesses were slow to appreciate VoIP and for good reasons. Vendors have worked on improving reliability and quality, accompanied by investments in infrastructure. Once businesses discovered the benefits of VoIP, business started booming. As a category, enterprise VoIP has long since surpassed consumer services in terms of volume and value.

The industry itself bears little resemblance to what it was in the previous century. It is no longer young but is rather classified as a mature business. Hosted VoIP has become the service of choice for organizations ranging from tiny startups to multinational corporations. On-premise SIP trunking is not lagging behind either, as more companies invest in VoIP for the long-term.

VoIP – What Lies Ahead?

VoIP has come a long way but what lies ahead for the industry? What are the big trends that will dominate VoIP for the next few years? Here are a few:

Legal Trouble between Regulators and VoIP Vendors

Innovations in VoIP technology has outpaced every effort by legislators to keep up. We will see more cases in state and federal courts over legal issues of regulation, authority, and boundaries. Is VoIP a replacement for traditional phone service or an Internet service? Can states regulate the industry under existing law or do we need new legislation?

VoIP services are not bound by geographical boundaries. A service provider in the UK may serve companies in the US with a data center in Japan. Who has the authority in such cases? These are a few questions that will come up in the future. Court rulings in the various cases will form the basis for decades of regulation to come.

Phone to Phone Segment Will Grow the Fastest

VoIP calls fall into one of three categories –

  • Computer to computer
  • Computer to phone
  • Phone to phone

Computer to phone is the largest segment in terms of market share. It has also grown the fastest as organizations deploy VoIP to interact with customers, partners, and suppliers. VoIP plays an important role in enterprise marketing, sales, customer service, and tech support.

However, the future lies in the phone to phone segment. The proliferation of smartphones, penetration of 4G technologies and the launch of 5G will help boost growth in this segment.

Corporate Versus Consumer – Who Wins?

Corporate VoIP calling dominates the global market in terms of value. Growth in this segment will continue as more organizations deploy hosted or hybrid solutions. Smaller companies will switch to VoIP as advanced features become more affordable.

That is not to say the consumer segment will remain stagnant. Millions of users in developing nations now have access to VoIP, thanks to the growing adoption of smartphones and tablets. Although the segment may not grow much in the US and Europe, the sheer volume of users in countries like China and India will boost usage.

VoIP Growth by Region

The global VoIP market is divided into four key regions:

  • North America
  • Europe
  • Asia Pacific
  • Rest of the world

All four regions will show sustained growth over the next few years. However, Asia-Pacific region is predicted to grow the fastest due to a few reasons. Businesses in these countries will adopt real-time communication technologies as Internet penetration improves. Coupled with the proliferation of smartphones and tablets, the annual growth rate in this region will be higher than elsewhere.

Consolidation and Strategic Partnerships

Large players in the VoIP industry focus on innovation and invest substantial sums on research. These vendors will have the edge in a competitive market, pushing out smaller players. The industry will see a series of mergers and acquisitions as vendors strive to keep pace with growth.

We can also expect strategic partnerships and joint ventures between key players across various regions. Established players will use this strategy to enter new markets and improve their geographical footprint.

Technological innovation in VoIP makes it difficult to predict the next big thing. But these market trends will play out over the next decade, much as they have in other industries.

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