Unified comms in the cloud is having an impact on traditional telephony business.
A decline in on-premises private branch exchange (PBX) licenses led the global market to decrease 8% in 2017 from 2016, to $5.7bn.
Total PBX lines were down 9% year over year in 2017, with every segment taking a hit, says a researcher.
"The on-premises enterprise telephony market continues to be tough," said Diane Myers, senior research director for VoIP, UC and IMS at IHS Markit.
"Just as we see one area begin to improve, it's offset by slowdowns in specific geographies or market segments.
"Many businesses are holding off on upgrades and new purchases, and the move to cloud services is having an impact.
"Underscoring the declines are not just slowing business purchases, but competitive pricing and the move to recurring expense models, which has resulted in market swings."
Although enterprise spending is healthy, businesses are giving low priority to telephony upgrades and expansion on the premises side; PBX average per-line revenue was $167 in 2017, a 1% uptick from 2016.
Enterprises continue to migrate to IP-to pure IP PBXs in particular-but the segment remains smaller than hybrid systems; hybrid IP PBXs represented 64% of all lines shipped in 2017.
Demand for unified communications (UC) has been erratic over the past four years, but the segment was in positive territory in 2017, with revenue up 5% from the prior year; UC adoption is growing as more functionality is incorporated into PBX packages.
On the vendor front, Microsoft led in UC global revenue market share with 67% in 2017, trailed by Cisco and Avaya.
For IP phones (IP deskphones and softphones), Cisco was the frontrunner with 35% of units shipped in 2017; Avaya was second with 14.