By Johna Till Johnson, Nemertes Research
March 25, 2005

The recent announcement that the City of San Jose will be deploying VOIP solutions from Nortel Networks (NYSE: NT) for voice, data and converged applications illustrates three key trends.

First, VOIP is gaining traction even among traditionally cost-conscious and conservative organizations, such as state and local governments and small-to-medium businesses (SMBs). Until recently, many such enterprises have been reluctant to plunge into VOIP, but the City of San Jose’s decision illustrates the fact that in many respects, VOIP has come of age with this organizations: In Nemertes’ recent convergence benchmark, 75% of SMBs said they were adopting VOIP now, with 63% of adopters saying they planned a full organizational rollout.

Second, cost concerns are critical. All (100% of) SMBs say that cost-savings is a critical business driver, and the City of San Jose cited cost as a key element of its decision. Companies considering VOIP should assess both up-front capital costs (which average around $700 per user, as well as ongoing operational costs (which are on the order of $100 per user per year).

The complete Impact Analysis is available to Nemertes clients. For more information, please contact Christine Zimmerman at christine@nemertes.com [1]