Volumes Up but Prices Plummet in the Enterprise

RENO, NV, June 5, 2013

New data from Synergy Research Group shows that the first quarter of the year was not a happy one for enterprise-oriented technology vendors, with revenues down by as much as 11% year on year in some of the major markets. The root of the problem is aggressive price competition. Across some of the largest enterprise market segments prices have plunged by an average 17% since the end of 2011.

Vendors have actually seen some reasonably strong volume growth in many areas, including enterprise voice, Ethernet switching and telepresence, but the declining prices are tending to mask the underlying unit growth. It is declining revenues that are taxing vendors and grabbing the headlines.

“Some of the price declines have been quite brutal” says Jeremy Duke, Synergy Research Group’s founder and Chief Analyst. “Down in the trenches, you can see where some vendors are quite deliberately pushing prices down to gain a competitive edge, but also at a high level the market is reacting to the disruptive impact of software based solutions and cloud. Enterprise vendors will need to get creative in order to protect revenues and margins.”