Cisco Systems Inc. recaptured the lead in the Internet-based phone-equipment market last quarter as Avaya Inc.'s share slipped to its lowest level in a year, according to Synergy Research Group.
Cisco Systems Inc.'s share of the $5 billion market for corporate Web-based phone gear increased to 24.6% from 24.1% in the previous period, Reno, Nevada-based Synergy said yesterday in its quarterly report. Avaya Inc. fell to 23.4% from 27.2%. The top spot has flip-flopped over the past four quarters as Cisco and Avaya made acquisitions and introduced new products to help customers upgrade phone systems.
The competition will intensify this year as the size of the market grows 33% to $6.5 billion in sales, said Synergy CEO Jeremy Duke. „They're going to be cranking up the pressure against one another,” Duke said in an interview. „Marketing campaigns will be targeting each others' customers.” The Synergy report comes a week after Cisco CEO John Chambers said his San Jose, California-based company is taking sales from almost all of its „major” competitors.
Cisco in October agreed to buy Orative Corp., a maker of software that links corporate phone networks to wireless handsets. Avaya made a similar acquisition in November, buying Traverse Networks Inc. Avaya followed up in January with a €110.4 million ($144.7 million) offer for Ubiquity Software Corp., whose products combine voice, video and data in the same transmission.
„Avaya and Cisco are neck-to-neck in this market,” wrote Troy Jensen, an analyst at Piper Jaffray & Co., in a report yesterday. He rates both stocks „outperform.” Shares of Cisco rose 27 cents to $27.46 at 4 p.m. in Nasdaq Stock Market trading. They have climbed 39% in the past year. Avaya shares rose 22 cents to $13.07 after gaining 27% in the past 12 months.
Nortel Networks Corp., North America's largest maker of phone equipment, is third in the Web-based phone market. It increased its share to 14.7% from 14.5%, Synergy said. Alcatel-Lucent, the world's biggest seller of telecommunications equipment, was fourth with 13.3%. Smaller suppliers Mitel Networks Corp. and ShoreTel Inc. increased their share of the market to 4.5% and 2.2%, respectively, from 3.9% and 1.7%.
Duke said those companies are doing a better job at reaching small and mid-sized businesses. „The large equipment vendors haven't aggressively figured out how to get into this space yet,” Duke said. „It's a question of when.” (Bloomberg)