Cisco tops the field in VoIP costs

Comparison by Nemertes rates Avaya, Nortel, ShoreTel.

In the Nemertes study, Avaya, Cisco, Nortel and ShoreTel garnered enough statistical responses to be counted individually.

Guide to VoIP logo

When we asked respondents how much time they spent on operational start-up, measured in minutes per user, Cisco came out on top at 250 minutes per user, followed by Nortel at 186 minutes, Avaya at 77 minutes and ShoreTel at 69 minutes.

That makes sense, because Cisco rollouts are typically larger and more complex than the other vendors'.

Cisco IP telephony systems often require additional network upgrades, which must be taken into account during the planning and installation phases. ShoreTel deployments are typically smaller and less complex than the others.'

For example, Cisco's VoIP rollouts include the highest average number of VoIP handsets: 3,344 per organization. Avaya has the second-highest average number of handsets (2,393), Nortel averaged 722 handsets and ShoreTel averaged 522 handsets.

When it comes to translating time into money, Avaya's average cost per user is third lowest, even though it has a relatively high average number of users. Part of that can be explained by the fact that the cost of an IP PBX deployment is spread across more users, so the average cost per user is lower. Also, Avaya rollouts often are limited to the contact center, which means less complexity than when the technology is deployed organizationwide.

That's different from Nortel, which serves more midsize businesses than Cisco or Avaya. With fewer users to absorb the central PBX deployment costs, the per-user costs are higher.

Per-user costs

The research showed that organizations are spending a median of $143 per user for projects with fewer than 1,000 users and a median of $53 per user for rollouts of more than 1,000 users.

For implementations of fewer than 1,000 units, ShoreTel costs the least per user, at $105. Cisco, Nortel and Avaya are fairly close in operational start-up costs, though Nortel's and Avaya's are higher than Cisco's. Interestingly, Nortel and Avaya are within $1 of each other, indicating some stability and consistency in the effort involved with the legacy TDM vendors.

For installations of 1,000 units or more, we see lower costs per user overall. Much of the implementation cost is in planning the overall project and installing the core IP PBXs. The ability to spread those costs among a larger user base reduces the cost per user. ShoreTel again comes out on top, at $31 per user, followed closely by Avaya at $50. Cisco is the most costly, at $165 per user, followed by Nortel, at $132 per user. The figures don't depend on what the vendors charge, but on how easy their products are to install - and how much expertise their customers possess.

Capital costs

Equipment costs round out the initial total investment for a VoIP implementation. Organizations spend an average of $878 per user for IP telephony switches and handsets in rollouts of fewer than 1,000 users, and $628 per user in rollouts of more than 1,000 users.

One notable shift year over year is that prices have become more consistent among vendors. In other words, the per-user pricing within each size category is reasonably close in most, but not all, cases.

ShoreTel is the low-price leader for smaller implementations. Avaya has the lowest prices for larger implementations - a departure from the past two years, when Avaya's pricing was among the highest.

When assessing all capital costs - network upgrades, voice mail or unified messaging, conferencing and management - associated with a VoIP deployment, the numbers obviously increase.

Nemertes expects these figures will increase as organizations require and budget for more management tools and collaborative applications.

Benchmarking VoIP savings

Staff savings and less expensive audio-

and videoconferencing can add up.
Annual personnel savings
 All participantsParticipants that reduced staff
$ saved$81,240$192,584

Number of

Audioconferencing costs
Average minutes/month1,200,000
Average per-minute rate$.079
Total monthly cost$94,800
Average IP audio bridges$88,000
Operational start-up$48,000
Payback in months (all calls)1.43
Payback in months (50% of calls)1.88
Payback in months (30% of calls)4.78
Videoconferencing costs
Average hours/month80
Average per-hour rate$250
Total monthly cost$20,000
Average IP audio bridges$162,189
Operational start-up$68,000
Payback in months (all calls)11.51
Payback in months (50% of calls)16.33
Payback in months (30% of calls)38.36


Learn more about this topic

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VoiceCon: Avaya CEO says VoIP may not lower costs


How the vendors stack up


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Copyright © 2006 IDG Communications, Inc.