The document discusses opportunities for VoIP solutions providers in the SMB market. It notes that SMBs make up the majority of businesses but a small percentage of employees. While familiarity with VoIP is growing in SMBs, adoption remains low due to concerns about reliability, costs, and complexity. The document argues that a complete managed VoIP solution that eases the transition from TDM, provides key system features, and reduces costs could address SMB needs and concerns. This represents an opportunity for VARs to develop recurring revenue streams and differentiate themselves by bundling VoIP, IT services, and support.

3. ABOUT THE SMB MARKET

4. SMB Market Potential Source: US Census NAICS Data SMBs There are ~4.5M SMB with 2 to 100 employees* SMBs make up 97.6% of the business population! (but only 20% of the employee base!) * After eliminating 0 and 1 employee businesses

5. SMB – Local & LD Expense % of Total Telecom Expenditure 68.9% 74.0% 65.2% 62.5% 65.4% 74.7% 42.0% 54.7% 38.3% 37.7% 62.0% 58.6% 56.3% 67.0% 46.4% --- --- --- --- --- --- 57.9% # of SMB's (5-99 EE's) Market Value $ 153,781 $2,294,258,739 172,478 $1,204,213,800 84,005 $486,560,320 155,242 $842,181,640 115,262 $578,278,675 290,277 $1,100,625,884 60,456 $213,433,862 31,299 $102,820,971 201,388 $632,390,542 51,038 $158,258,630 208,596 $618,378,670 234,560 $661,374,758 455,446 $1,178,931,080 284,813 $726,444,038 3,250 $3,558,750 34,485 --- 22,336 --- 6,789 --- 5,275 --- 5,096 --- 1,402 --- 2,577,274 $10,801,710,360 KEY Market Segments

10. SMB BUYING TRENDS AND MOTIVATIONS

16. OPPORTUNITIES IN VOIP FOR THE SMB MARKET

20. Example: Multi-site/Remote User

30. Acme’s Current Cost Structure Current Scenario Monthly Yearly 3 Years Data - DSL for Business Class (4 DSL Lines) $400 $4,800 $14,400 Local & Long Distance Charges with usage (16 CO Lines) $1,500 $18,000 $54,000 Service Contract: Data $100 $1,200 $3,600 Service Contract: Telephony $100 $1,200 $3,600 TOTAL $2,100 $25,200 $75,600

32. Acme’s Proposed Cost Structure Managed Services Scenario Monthly Yearly 3 Years Monthly Managed Services Fee Telephony & Data Services Flat Rate Fee $1,110 $13,320 $39,960 Includes: 1. ITSP Services / 12 SIP trunks / Flat rate LD + 55 DID numbers ($25-$30mo each) 2. 2xHigh speed Internet Access (up to T1 @ $350/mo each) + DSL ($60/mo) 3. CO Lines - basic coverage for fall over ($50/mo w/o usage) Service Agreement - Data & Voice $300 $3,600 $10,800 TOTAL $1,410 $16,920 $50,760 Savings - % 33% 33% 33% Savings - $'s $690 $8,280 $24,840 One Time Charges: 1st Year 3 VoIP Ready New Phone Systems (e.g. Allworx) $5,400 55 12-button PBX/Key VoIP Phones $12,595 Software/Hardware Options $3,000 Other Hardware & Installation and Set-up $6,230 Total One Time Charge for Equipment $27,225