TeleGeography says that there will be 4.1 million VoIP subscribers by end of 2005 and these subscribers will spend around $1 billion on their VoIP home services. U.S. residential subscriber totals have jumped from 150,000 at the end of 2003 to well over 2 million as of March 2005. Vonage says it has about 700,000 of those 2 million subscribers, but cable operators are catching up. By the end of 2005, TeleGeography predicts that Cablevision, Comcast, and Time Warner together will have 2 million subscribers and nearly one-half of the total residential VoIP market. In other words, the heat is on, and it will be interesting to see how long Vonage can hang around in the top tier. I hope they do – because they are keeping a lot of people honest.

Still you can see the “mainstreaming” of VoIP show up in the equipment sales, which are up 40% in 1Q 2005 from 1Q 2004 to about $493 million. These are world wide numbers. “The market continues to move further mainstream, and last month’s announcement from BT is further indicative of the maturation of the market,” said Infonetics Research’s Kevin Mitchell, directing analyst.

From Infonetics Research: 1Q05 Market Highlights

• Worldwide softswitch revenue is up 4% from 4Q04 and 63% from 1Q04
• Nortel is the worldwide revenue market share leader in the softswitch market
• Siemens is number two for worldwide softswitch revenue
• Italtel is third worldwide but first in EMEA after nearly doubling softswitch revenue share in EMEA in 1Q05
• Trunk media gateways topped $200 million and high-density media gateways represent 78% of all trunk media gateway revenue
• The geographic breakdown for total service provider next gen voice equipment: 45% North America, 27% EMEA, 21% Asia Pacific, and 7% CALA