November 2, 2004

Cisco Systems® continues to support the success of IP communications this week with VoiceComm 2004, the largest event on the topic in South East Asia.

With separate sessions in Malaysia and Singapore, the event promises to chart the progress of a technology platform that, in the space of just a few years, has gone from being seen as an unlikely contender in the voice market to the central building block for new infrastructure rollouts.

The telecommunications market is now awash with IP telephony success stories, from the 30 percent reduction in operating costs achieved by Singapore Polytechnic to the way that recruitment firm Michael Page International has been able to improve its customer service.

Cisco® is helping to propel this success with an industry-leading range of IP phones and IP communications platforms.

To date, Cisco has sold 250,000 IP phones to more than 1,000 customers in Asia Pacific. This is a significant percentage of the more than 16,500+ customers, and more than 3.5 million phones worldwide. The growth in demand in Asia Pacific is staggering; the number of phones shipped in the 2004 financial year was double that of 2003.

To complement the two VoiceComm 2004 events that Cisco is hosting and to provide an additional perspective on the startling growth that IP telephony is experiencing in the region and worldwide, News@Cisco spoke to Gary Coman, Cisco head of IP Communications, Asia Pacific.

How great is the demand for IP telephony in Asia Pacific?

Gary Coman: The demand for IP telephony in Asia Pacific is strong and growing stronger. Most of the companies we talk to are either evaluating vendors or planning the timing that will be right for them to make the transition.

No one is looking for a next-generation time-division multiplexing (TDM) platform and I do not think customers have many hopes to see additional feature development on their existing systems. The transition will only accelerate from here.

More and more vendors are trying to move their customers to IP-based systems, although most of these are hybrid, to maintain their customer base because the demand has grown.

Is this demand likely to change in the next few years?

Gary Coman: Yes, it will accelerate. I would guess that in less than five years you will not be able to purchase a new TDM private branch exchange easily. There will be a large secondary market and systems will be maintained for expansions, but new systems will be IP.

It is kind of like buying a new car. Would you go to a dealer and purchase a brand new 1985 model X when you can get a 2005 model X for the same price? The fuel economy is better, the user experience is better, the reliability and security or safety is better.

The same is true for IP telephony and businesses understand this.

What is driving adoption of IP telephony in the region?

Gary Coman: There are many factors, really. For each customer there are usually two or three crucial reasons why they see this as the only way forward.

Things like total cost of ownership reduction, long-distance toll reduction, single network management savings and return on investment are certainly important.

What more and more people are starting to realize is that there are also profound benefits to end-user productivity when you start to empower users with new services such as unified messaging, desktop video conferencing, Extensible Markup Language applications such as automated time cards and global mobility through applications such as soft phone.

This is where businesses really see the benefits and you can only realize this when you start empowering users with IP services; that is to say, when you really take IP to the end user.

Too many solutions offered in the market today offer the promises of IP but deliver very little to the end user.

In which countries is demand strongest, and why?

Gary Coman: Demand is strongest in countries where labor costs are not extremely low and where businesses make strategic purchase decisions for technology as opposed to just looking at price. You cannot really say any country purely falls into both categories.

Certainly adoption is faster in places such as Australia, New Zealand, Singapore, Hong Kong and, more and more, in India.

That does not mean that demand is soft in important countries such as China and South Korea, it just means that from a timing perspective, and in looking for productivity benefits relative to cost of labor and technology, it has happened first in other locations.

We fully expect the market to grow dramatically in these countries in the next one to three years.

How is Cisco supporting the growth of IP telephony across Asia Pacific?

Gary Coman: IP telephony is a strategic growth area for the company and as such we are promoting the products and solutions through marketing activates such as trade shows, industry events and advertising.

Continuous education of the market also helps with the growth. As more customers, partners, analysts, press and even competitors really see the benefits of pure IP communications and the changes it can bring to how people and businesses interact, the faster the technology will grow.