VoIP Services Almost a $50 Billion Industry. But, Who Knows About SIP?

The State of VoIP Services

In the past few months, we’ve blogged a good bit about the SIP adoption - from our increase in customers and registered SIP phones to our shortly-lived discovery of Google Voice SIP addresses. Recently, a company called Infonetics Research published findings that the VoIP services industry has grown to a $50 billion industry. Here are some highlights from the press release:

  • Infonetics Research forecasts the combined business and residential/SOHO VoIP services market to grow to $74.5 billion in 2015
  • Managed IP PBX business VoIP service revenue is expected to more than double from 2010 to 2015...
  • The fastest growing segments of the VoIP services market are SIP trunking and hosted UC telephony
  • The number of residential VoIP subscribers increased 19% in 2010 to 157 million worldwide
  • Based on healthy demand for cloud-based services, the number of seats for IP Centrex and hosted UC services grew 20% in 2010

- Infonetics press release

These findings are very encouraging to us, and sparked a discussion between Leo and me on what the future will be like as more people continue to adopt SIP into their home and work lives. Will everyone one day know what the acronym SIP is? Or, will they simply use it as a term to describe what it does, like how email is used? (“call me at user@domain.com?”] Or, will we be using a term that’s entirely different? Before we explore that, let’s take a look at the terms in the above highlights to ensure we’re all othe same page regarding this almost $50 billion industry:

Residential/SOHO VoIP Services:
Voice over the Internet services provided to a person’s home or home office. This service allows the user to connect an IP phone to their broadband and make phone calls; it does not typically include multiple extensions and other features needed by office employees. An example of a popular residential VoIP service is Vonage. Managed IP PBX business VoIP: We interpret managed IP PBX business VoIP to be a service wherein the service provider manages all the equipment, software, facilities, and technical expertise for their clients. A typical managed VoIP service package also includes the design, and deployment of telephony equipment and software, as well as the maintenance and management of existing phone solutions and the new phone network. Many people often get hosted VoIP confused with managed VoIP because someone else is managing your business VoIP phone system in both cases. Managed simply means it's your physical phone system, just managed by an outsourced team, possibly in an independent data center. SIP Trunking: A SIP (Session Initiation Protocol) connection is a service offered by many ITSP (Internet Telephony Service Providers) that connects a company's PBX to the existing telephone system infrastructure (PSTN) via Internet using the SIP VoIP standard. We offer a SIP trunking service called PSTN Gateway. Hosted UC Telephony/Services: Hosted Unified Communications Telephony, also Hosted VoIP, is Internet-based voice and data communications where telecommunications applications, switching and storage are hosted by a third-party outside of the organization using them, and they are accessed over the public Internet. Our service OnSIP Hosted VoIP is an example of a hosted UC telephony service.

SIP Adoption: A Few Predictions Regarding Terminology

More than three years ago, Garrett Smith wrote a piece called “No one wants SIP trunking”. It’s not quite what you think. He wasn’t suggesting that no one wants SIP trunking service - the Infonetics report clearly shows that there is a growing demand - Instead, he made a statement about marketing; he is suggesting that, with the exception of those highly knowledgeable in the Internet Communications industry, people don’t know what the term SIP trunking is:

“Businesses do not know what a SIP trunk is and honestly they really do not care. They are not looking for SIP trunks. What they are looking for is reliability, quality and low cost telephone service. The transport mechanism is secondary.”

In his article, Smith uses a keyword research tool to look up how many queries there were per month for the term “SIP trunking”. In early 2008, there were only about 300, which looked tiny compared to the 3000 monthly searches on ‘business VoIP’ at the time. Using the tool that he referenced, I did those same queries today. According to the tool, there are about 201 daily Google searches and about 83 daily Yahoo searches for the term 'SIP trunking', bringing the total to 284 per day or around 8,500 per month. Let’s be extra conservative and assume that Smith was only talking about Google searches; the monthly total would be around 6000 searches, still 20 times what Garrett Smith saw in 2008. Queries on the term ‘business VoIP’ have grown to 11,000 per month if we take into account both Google and Yahoo queries, 7800 if we’re just looking at Google. The number of searches on ‘business VoIP’ only grew about 2.6 - 3.7 times, depending on what search engines Smith was including in his 3000 back in 2008. While it can seem like Garrett was wrong to some degree about the term ‘SIP trunking’, he does bring up a very good point. Our industry is inundated with technical jargon; words, phrases, and acronyms that come as second nature to us, but are completely foreign to the masses. Forget SIP for a moment, how many people in the world even know what ‘VoIP’ stands for? How many are interested? I did a quick test comparing the number of people searching on the term ‘VoIP’ and the number of people searching for ‘Skype’. The daily number of queries came out to be 50,324 vs 3804. Can you guess which is which? I suppose part of the struggle in getting some SIP terms into the mainstream vocabulary is the fact that our entire industry is an alternative approach to an embedded technology: landlines, and regular phone systems. Shifting the conversation to a brand name like Skype or Vonage is arguably much easier (at least in the beginning) than focusing on the back end technologies and processes that do the same thing, but in a different way.