VoIP Drives Softswitch Boom

The booming softswitch (software switches) market should continue its rapid growth rate through 2008, as major telecom-service providers show no slowdown in their appetites for the technology, according to a new study.

In-Stat/MDR predicts the softswitch-compliant market will grow at a compound annual growth rate of 65 percent to 2008, when sales will hit $2.05 billion.

The high-tech market-research firm said 2003 was a breakout year for softswitch technology, when sales expanded by 42.4 percent. Softswitches are advanced platforms that support a wide range of features in a single box. In a statement, In-Stat said it "expects this market to maintain high growth rates over the next several years as major service providers worldwide expand their VoIP networks."

Norm Bogen, an In-Stat research director, said wireline providers will account for the majority of softswitch purchases, although there is a trend toward a rising demand for softswitched networks by wireless and cable providers.

As telecommunications traffic increases over cable, landline, and wireless architectures, many service providers are reaching the limits of their switching capacity. Increasingly, traffic is being driven towards packet technology, which in turn is driving increased sales of softswitches. "Softswitch-based networks enable packetized voice to travel along data networks, resulting in cost savings and the ability to deliver new services," Bogen said in a statement. "Service providers have been evaluating this technology for the last couple of years and have begun to deploy these new voice networks."

Nearly three-quarters of softswitch-license revenue comes from Class 4 applications, with the remainder coming from Class 5 applications. Nortel Networks is the shipment leader in both categories, the market-research firm said. In-Stat singled out MCI and Sprint for making large softswitch purchases in 2003 in North America.