What the Recession Will Do to VoIP
Signs indicating a potential U.S. recession are all around: collapsing home values, soaring oil and precious-metal prices, a falling dollar, rising unemployment and, perhaps most ominously, reduced business spending. While it's still not certain that a recession is inevitable, the recent string of gloomy government and private statistics make an economic slump increasingly likely.
During the last U.S. recession in 2001, the VoIP market barely existed. Today, IP telephony is an established telecommunications technology with large numbers of business and residential users purchasing products and services from a growing number of vendors.
Exactly how a recession would affect the VoIP industry and its customers is hard to say at this point. Still, it's possible to make some educated guesses and to understand that an economic downturn may have both bad and good implications for the VoIP industry and its customers.
The Bad
When businesses are pinched by falling revenues, they often respond by scaling back expansion plans, curtailing new initiatives and cutting back on purchases. This could be bad news for VoIP equipment makers — the vendors who build everything from servers to gateways to phones — as more businesses cancel orders, switch to products with less power or fewer features or simply never place orders. Software vendors will also likely feel the pinch as fewer businesses purchase their offerings.
As businesses trim their staffs by setting hiring freezes and laying off employees, VoIP service providers may see more companies asking for smaller, less expensive service contracts designed to meet the needs of shrunken work forces. Businesses that fail entirely won't contract for any services at all, of course. On the other hand, sagging product and service markets could be a bonanza for VoIP customers, as vendors and providers slash prices and rates in order to unload excess inventory and network capacity.
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