TDM and VOIP

3/6/2006 -- The sun wasn't ever supposed to set on the Spanish or British empires, but, of course, it did. In the same way, optimists have heralded the longevity of Time-Division Multiplexing (TDM), which was first productized more than 40 years ago.

Don't look now, but after several false starts, the sun may finally be setting on the longtime digital voice transmission champ -- if new research from market watcher Infonetics Research is to be believed, that is.

According to Infonetics researchers, the enterprise telephony market is in the midst of a move away from TDM-based circuit switching technology toward packet switching. Between 2004 and 2005, for example, worldwide TDM system revenue fell by 15 percent and IP PBX revenue rose by 23 percent, according to Infonetics Research's latest Enterprise Telephony report.

Taken together, worldwide TDM and IP PBX systems revenue amounted to $8.1 billion last year, a 12 percent increase over 2004's total.

That's just the beginning. Between 2005 and 2009, aggregate telephony revenues will grow by as much as 43 percent (reaching approximately $11.6 billion), even though TDM-related revenues are expected to plunge. During that period, for example, IP PBX revenues could grow by up to 82 percent while TDM revenues could plunge by even more -- 88 percent.

"The PBX market came in at our expectations in 2005, and from a global perspective is doing very well," said Matthias Machowinski, directing analyst at Infonetics Research, in a statement. "Worldwide revenue growth accelerated in 2005, although it's mostly coming from EMEA, Asia Pacific and CALA. North America lost revenue share in 2005 as things slowed down here, showing just 4 percent revenue growth for the year."

In the overall PBX/KTS systems market, Nortel, Avaya, Siemens, Alcatel and NEC (in succession) were tops last year in worldwide line shipments. Nortel led in North America, followed by Avaya and Cisco -- although the North American race, in particular, is still very close, Infonetics said.

Elsewhere, last year Cisco dominated the market for IP phones with 42 percent unit market share.