China business VoIP exchange spending to triple

Businesses in China will triple their spending over the next four years on hardware that saves money by routing phone calls over the internet, a new report forecasts.

China's annual corporate spending on IP private branch exchange (IP PBX) hardware will rise from $164.1m this year to $479.5m in 2010, according to analysts at research firm In-Stat. 

A PBX is a computer system that acts like a switchboard to connect incoming and outgoing phone calls with dialled numbers, and to route internal calls.

A modern VoIP PBX will automatically route calls via the internet whenever possible to cut costs. The systems also provide voicemail boxes, call forwarding and many other common telephony functions.

"Business users in China are seeing VoIP as a basic function in IP PBX products," said Kevin Li, a China-based research analyst with In-Stat.

Rapid new business growth in China is expected to be a key driver as the global market for business VoIP hardware and software reaches forecast sales of $5.5bn in 2007, Juniper Research predicted earlier this year. 

The global IP PBX market will represent slightly more than a quarter of that figure, at $1.6bn in 2007, with China being one of the largest single markets.

Although firms have had concerns about the safety and quality of VoIP calls, increasing experience with internet telephony has helped to shift perceptions. VoIP is now a "proven reliable technology to carrying voice over a data network ", said Li.

Larger enterprises are leading the way, with small and medium businesses lagging in enterprise-scale VoIP adoption, according to In-Stat.

"Several solutions designed to cope with various risks are gradually alleviating potential concerns about reliability and security for carrying voice over an open and standard data network," Li explained.

However, the analyst added that vendors fighting for a share of the growing market may have to offer additional training to channel partners as the traditional data network and voice network channels may not be suitable for IP voice services.

Although the VoIP boom will help total PBX shipments grow at a compound average rate of 10.1 per cent from 2005 to 2010, In-Stat predicts that sales of traditional PBXs will shrink by more than 31 per cent per year.

China will become an increasingly important market for corporate VoIP, but Juniper Research forecasts that overall global spending on VoIP hardware and software will actually fall after 2007 from $5.5bn to $3bn in 2010.

These figures do not include call charges or sales of other telephony services.

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