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Why is hosted unified communications for Small and Medium Enterprises, at least a
$50B opportunity for AT&T and Verizon in United States?

Company size, employees '1-4' '5-9' '10-19' '20-49' '50-99' '100-249' '250-499'
Number of companies (US
Census Bureau 2007) 8,390,340 2,915,976 1,959,520 1,330,034 453,080 257,694 64,940
Average number of
employee per enterprise 2 6 15 30 70 150 350
Total employees 16,780,680 17,495,856 29,392,800 39,901,020 31,715,600 38,654,100 22,729,000
% willing to switch to unified
comm. Likely 50% 50% 50% 50% 50% 50% 50%
% willing to switch to unified
comm. Conservative 40% 40% 40% 40% 40% 40% 40%
Rev per
emp@$60/mth(handset,
phone, software) $ 720 $ 720 $ 720 $ 720 $ 720 $ 720 $ 720
Revenues (conservative) $B $ 5 $ 5 $ 8 $ 11 $ 9 $ 11 $ 7
Total (Conservative)
Billion $ $ 57
Revenues per segment
(likely) $B $ 6 $ 6 $ 11 $ 14 $ 11 $ 14 $ 8
Total (Likely) Billion $ $ 71

The business case above shows that with adoption level of just 40-50% and with price
points of just $60 / month /employee which includes mobile handset, phone and software
the size of the market is substantially large at $50B-$70B

Small and Medium size enterprises don’t have the luxury of dedicated PBX system- IP or
otherwise. Telecom operators such as AT&T and Verizon can offer a hosted unified
communications solution which entails mobile and fixed line convergence, instant
messaging, presence, video and tele-conferencing over PC and mobile phones and
integration with mail exchange and messaging systems and offer a unique proposition to
small and medium size enterprises.
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9,000,000 $14B
8,000,000 $12B
7,000,000
$10B
6,000,000
5,000,000 $8B
4,000,000 $6B
3,000,000
$4B
2,000,000
1,000,000 $2B
- $B
'1-4' '5-9' '10-19' '20-49' '50-99' '100- '250-
249' 499'

Number of companies Revenues per segment (conservative)

SME data as defined as companies up to 500 employees form a large part of US economy
as indicated by 2007 data published by US census bureau. Many / most of them can’t
afford a dedicated PBX system. Unified communications provides them not just fixed
mobile convergence value but also a host of other features; access to which currently
requires them to spend significant amount– conferencing, instant messaging, presence
etc.

Hosted unified communications offering to SME is indeed the answer to eroding telco
ARPUs

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