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VoIP Growth Vastly Outpacing Traditional Voice

VoIP system sales dwarfed those of traditional voice systems for the year ended in June 2005, according to a new research report issued this week by investment firm Merrill Lynch.

As of June, VoIP system sales grew 31 percent year-over-year, while sales of legacy voice systems declined by 20 percent during the same period, according to the report.

The drop in sales of traditional voice systems apparently cancelled out much of the momentum VoIP system sales gave to the overall telephony market, which grew only 2 percent year-over-year, to $2.24 billion, according to New York-based Merrill Lynch.

Heightened competition between the two fastest-growing VoIP vendors - Cisco Systems and Avaya - is underscored by the separate approaches of the two vendors, the report stated.

"Avaya and Cisco have consistently gained share in the enterprise telephony market, each with a slightly differing product strategy. Avaya offers a more manageable or slower migration path to IP that does not require the replacement of a company’s existing legacy PBX voice system, while Cisco banks on “rip and replace” deals which involve a new IP infrastructure and with new IP telephones," the report explained.

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