If you’re IPC Systems, what do you do? You remain the market share leader in the turret business. But over the last 10 years, you’ve watched your U.S. customer base shrink, as there are fewer traders on desks these days requiring the company’s phone product.
For IPC, the Jersey City, N.J.-based company, the answer was to offer current customers a new product–one that could also be sold to an entirely new group of investment professionals.
IPC Systems recently unveiled technology for its new trading communications and applications console that extends its reach within an organization. The new product, called Unigy, stretches turret functionality to a new audience of users–like analysts, portfolio managers and the back office.
In doing so, it broadens IPC’s customer base along the trading process and beyond just connecting traders, said Jonathan Morton, vice president of product marketing at IPC.
"Unigy is a case where we’re looking to expand our focus, not too much, but on the market we understand … being able to address more users," Morton said.
Resembling a switchboard, the new turret covers the basics, such as managing hundreds of lines, supporting multiple simultaneous calls, as well as employing two handsets and often 24 speaker channels. But Unigy’s technology also joins traders with those making investment decisions, such as the research analyst and portfolio manager. Traders can also connect to those handling more of the back-office responsibilities, such as in compliance and risk management.
"As more complex trades often involve multiple asset classes, these trades by definition require much more collaboration within the firm to create, to approve and then to get executed," Morton said. "We see a much higher need for collaboration between the trader and the investment support staff they work with."
The market for turrets worldwide is growing, according to Kimsey Consulting, a marketing research firm of trading technologies. It grew 7.5 percent worldwide from 2000 and 2010, from 215,600 desktops to 231,800. It is expected to increase worldwide almost 9 percent from 2010 to 2015, or to 252,300 desktops, Kimsey reported. And IPC has healthy market share in all regions.
In North America, though, the turret market has shrunk 1 percent from 2000 to 2010, or from 98,900 desktops to 97,800. But it’s expected to rise 7 percent from 2010 to 2015, from 97,800 desktops to 104,600.
Across the globe, IPC represented 51 percent of all turret installs through October 2010, according to Kimsey. In North America, that number climbed to roughly two-thirds of all installs, or 63,625 of 96,965 desktops. That market share has risen over the years. In 2005, IPC had roughly 45 percent of the world’s turret business, Morton said.
Unigy, as a product, illustrates IPC’s strategy to increase its customer base, said Dushyant Shahrawat, a senior research director with the research firm TowerGroup. This is important as IPC has been facing a market where its core customer base of traders has been shrinking over the past few years.
Today, the strategy is about "facilitating a greater amount of collaboration among the different types of participants within a firm and across firms," Shahrawat said.
This entails interactions between the trading, investment, compliance, technology and risk management departments. And it also includes trading function interaction across asset classes, such as equities, fixed income, foreign exchange and derivatives desks.
The vendor’s outlook is positive. IPC sees "tremendous" revenues coming from existing clients who are expanding their floors, Morton said. It also expects revenues growth from new clients, such as new hedge fund-type firms. Kimsey supports this outlook, as it reported that the market for turrets continues to grow beyond the traditional end-user–brokerages–to include hedge funds, asset managers and others.
Turrets have an important functional role in the trading process, despite the growth of electronic trading, Kimsey wrote. During the financial crisis, voice communication was an important tool for maintaining and recruiting new customer relationships, as well as for generating transactions, the firm added.
Overall, IPC runs two primary lines of business that target the financial services industry–trading systems and network services–that each generate roughly half of all revenues. Building tools that reach new customers helps the vendor expand its focus in both lines to address more users and offer more products, Morton said.
"We want to leverage the expertise and the relationships and sell more products to the same people, and then try to expand the group," Morton said of IPC’s strategy. "It’s the same story on the network side as it is on the trading systems side."
