It may not be the kind of news that some want to hear, but the recent revelation from Dell (News - Alert)'Oro Group is not without its beneficiaries: the enterprise telephony market is set for something of a fall, down to $8 billion in 2019.

As described by Dell'Oro Group's vice president of enterprise telephony market research, Alan Weckel, enterprises were making a move away from “premise solutions” and instead taking on cloud-based alternatives. Indeed, Weckel noted that the company was “surprised that only a few premises-based vendors have significant revenue from cloud offerings, with the remaining premises vendors being slow to create such offerings.” Weckel went on to note that this was “very similar to the early days of IP,” with a clear market direction in place but hesitation on the part of the vendors in going in that direction.

That by itself was big news, but it was just the start of the report; Dell'Oro's Enterprise Telephony 5-Year Forecast Report also noted that IP phone growth was set to continue each year of the forecast period, and would do so across a fairly wide swath of the industry. Third party handset makers like Polycom (News - Alert) and Grandstream, but also private branch exchange (PBX) vendors like Avaya (News - Alert) and Cisco were set to join in the gains in this changing market.

So while it may sound contradictory, this is actually good news. The market shrinking here describes what looks like a decrease in overall size, but this is mostly due to consolidation of hardware. Instead of everybody buying in on a premise-based solution, people are letting someone else handle the hardware and are instead making moves to the cloud. That actually may mean a lot more cloud services being purchased; trying to compare the fixed monthly costs of a cloud-based system against the often substantial up-front investment represented by premise-based systems is like trying to compare the costs of a cab ride to a new car. So for the market to shrink in the face of cloud-based developments makes sense, but it may actually represent something of an expansion as it takes a lot more cloud services to make up for the loss of premise-based systems. The clear gains set for the cloud sector—as well as for the PBX (News - Alert) market and the handset market—should spur some significant growth and hopefully fend off potential job losses from the losses premise-based systems are likely to incur.

At any rate, the Dell'Oro Group has put up a noteworthy projection here, and while it'll be a few years before we see just how right it was, it's still likely to hold water in the end and represent a fundamental change in the way communications services are provided.