Revenues from the sale of business VoIP hardware and software will rocket to $5.5bn by 2007, fuelled by rapid business growth in China, the adoption of voice-data convergence across western businesses and an echo of the year 2000 equipment purchase boom.

However, a report from Juniper Research warned that after this initial bonanza, sales of VoIP kit will stabilise and fall in revenue terms after 2007.

This will occur as the Chinese market begins to mature, the Y2K echo passes and competition from low cost suppliers in China and India erodes prices.

According to newly published research from Juniper, the total business VoIP equipment market will reach $5.5bn by 2007, falling back to $3bn towards the end of the decade.

The market for IP-PBXs is expected to reach over $1.6bn in 2007. The largest markets are likely to be North America and China. IP phone sales associated with IP Centrex/hosted system sales will reach nearly 16 million units in 2010.

In addition the research paper expects the VoIP applications market to show sustained growth, passing through $500m by 2010.

Juniper Research analyst Barry Butler, author of the report, said: "VoIP has the potential to transform business communications in terms of call costs, cost of operations and integration with business processes.

"However, as with other IP-based platforms, VoIP is a disruptive technology which will reshape the business communications vendor community."