Gartner Forecasts Worldwide Communications-as-a-Service Revenue to Total $252 Million in 2007

Multinational Organizations Expected to Adopt CaaS on a Global Basis Between 2010 and 2011

STAMFORD, Conn., September 4, 2007 � The market for communications as a service (CaaS) has started relatively slowly as providers determine how to define, package and market service as a value-added Internet protocol (IP) telephony offering, according to Gartner, Inc. Worldwide CaaS is projected to total $251.9 million in 2007, a 37.6% increase from last year. The market is expected to total $2.3 billion in 2011 (see Table 1), representing a compound annual growth rate at more than 105% for the period.

Gartner defines CaaS as IP telephony that is located within a third-party data center and managed and owned by a third party. The assets are not carrier-grade, the service is not �in the network� and the assets are multitenant in terms of usage.

�Users will begin to embrace CaaS more enthusiastically in 2009, attracted by predictable costs for fixed telecoms,� said Eric Goodness, research vice president at Gartner. �Users will also be attracted to CaaS as a means of shifting technology risk to the service provider. Technology obsolescence will be more easily managed by a scalable third party.�

Table 1
Worldwide CaaS End-User Spending Estimates (Millions of Dollars)
  2006 2007 2008 2009 2010 2011
Source: Gartner (August 2007)
CaaS 64.5 251.9 576.2 742.0 1,234.3 2,333.5

Gartner analysts said the initial slow start of CaaS will be compounded by a longer sales cycle, as customers will need time to get used to larger, but consolidated, prices.

�A single bill that consolidates telecom services with equipment infrastructure will gain acceptance,� Mr. Goodness said. �Providers are bullish about CaaS�s potential because of the opportunity to bundle more new features and capabilities to avoid service commoditization.�

Additional information is available in the Gartner report �Emerging Communications Services (Hosted IP Telephony, IP Centrex and CaaS), Worldwide, 2006-2011.� The report is available on Gartner�s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=511346&subref=simplesearch.

About Gartner:

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