12/2/2008 -- Voice-over-IP (VoIP) sales tumbled in the third quarter of 2008, although not all vendors were equally affected. Some -- like Cisco Systems Inc. -- actually bucked the prevailing trend, notching encouraging (in Cisco's case, astonishing) growth in the midst of an overall industry slackening.

First, the bad news: Service providers scaled back on VoIP equipment purchases in Q3 of 2008, leading to an 8 percent (sequential) drop in revenues, according to market watcher Infonetics Research. The drop-off was led by a bona-fide plunge in sales of high-density media gateway devices, as well as by a dip in the softswitch segment, according to Infonetics' new "Service Provider VoIP and IMS Equipment and Subscribers" report.

Infonetics, not surprisingly, blames the poor performance on the global economic crisis. "Third quarter service provider VoIP equipment sales confirmed what we started seeing in the previous quarter: in North America. Carriers were already slowing their VoIP investments after completing major projects; in Western Europe and some parts of Asia, such as South Korea, inventories were already high," said Stéphane Téral, principal analyst for VoIP and IMS at Infonetics Research, in a statement.

"The quarter also reflects the global economic downturn, which is turning the expected VoIP deployment dip into a drop. New VoIP projects will be postponed at best, and some may be cancelled altogether, as more consumers ditch their fixed lines, thus cutting the need for wireline upgrades. As such, we are predicting a two-year pause in the overall carrier VoIP space, with a pick-up expected in 2011."

What is surprising is that -- economic crisis or no -- year-over-year sales of softswitches, SBCs and media servers are actually up.

Similarly, Cisco posted an especially strong performance in the worldwide trunk media gateway segment, growing its revenues by 37 percent in the third quarter (on a sequential basis) and grabbing the No. 1 slot, followed by competitors GENBAND and Huawei. Elsewhere, Infonetics resported, Nortel is still tops in the worldwide softswitch market.

Things aren't as bad as they could be, either. According to Infonetics, "The five-year outlook for service provider next-gen voice is decent" in spite of an otherwise bleak economic outlook. Going forward, the market watcher expects that voice over broadband (VoBB) will "be the big [revenue] driver across the board." --Stephen Swoyer