1. Bridging Two Worlds www.citel.com Enterprise Roundtable Mega-Session Telephony Market Outlook The Transition to IP Mike Robinson CTO www.citel.com

2. Bridging Two Worlds www.citel.com IP Telephony Is Compelling Seamless Scalability Lower Operating Cost Better Disaster Resistance Revolutionary Features: -Computer-Telephone Integration (CTI) -Unified Messaging -Telecommuter/Branch Office Support -Web Based Administration

3. Bridging Two Worlds www.citel.com Having It All on TDM PBX TDM PBX What’s wrong with this picture?? Who is being difficult? WAN or VPN WAN or VPN IP IP Trunk Adaptor RAA Telecommuter Branch PBX / KTS Admin Server PSTN Voice Adaptors UM Server CTI Adaptor IP T. A. Circuit Trunks Admin Link Remote Access

4. Bridging Two Worlds www.citel.com Having It All on an IP PBX In an IP PBX, the call control application becomes a data application on a standard server platform. Other applications like CTI, UM, and Web Admin are built in and can run on the same server platform. All the applications communicate in an IP standard. Additional servers can be added in to provide scale. Trunk Gateway Trunks IP PBX Plus Applications PSTN LAN WAN or VPN WAN or VPN

5. Bridging Two Worlds www.citel.com IP Telephony Takes Over The Market It’s not a question of “if”, only how fast IDC suggests 50% IP PBX market share in 2005 InfoTech puts it in the middle – 50% share in 2006. Moving a $50B market means rapid growth for IP Telephony,. even though the total phone market is growing slowly BUT The rest of the market is still buying circuit switched phones. For another few years, most new sales are still circuit switched

6. Bridging Two Worlds www.citel.com Installed Base Lingers Long It takes a long, long time to drain the ocean 315M PBX phones installed w/w (per InfoTech and ABI) Annual handset sales are a small fraction of the base Wide majority of new sales today are still circuit switched At the end of this decade, PBX phone base is still 200M Later this decade, there will be massive replacement of. TDM PBXs with IP PBX systems.

7. Bridging Two Worlds www.citel.com What’s The Holdup? Many predictions from ‘99 would have put IP at 50% share today. Why isn’t it? -The Economy -Nothing is going as fast as it was. Carrier capital crisis has delayed deployment of IP Centrex. -Sunk Costs / Existing Investment -Massive pre-Y2K PBX buying in ’98 & ’99. -Fear, Uncertainty, and Doubt (FUD) -Too many competing standards, too much proprietary infrastructure. -Cost/Complexity of IP Deployment -A fully deployed IP Phone is $600 per seat! -Most LAN’s are NOT ready for IP Telephony

8. Bridging Two Worlds www.citel.com What Is Needed? What will make IP really take off? -Economic Recovery -People need to start buying again. -Better Migratory Solutions -The total system swap out is too big a leap. -More Open Choices -Better public standards. More interoperability. -Reduce Cost & Complexity of IP -IP Phones will get cheaper with time. -LAN infrastructure will get upgraded (but slowly). -Migratory solutions also ease the burden.