1998 U.S. sales grew to 15 million lines, representing a 9% increase over 1997. Analysis of year over year growth indicates that Total New Lines increased 8.4% and Add-On Lines increased by 11.2%. This is as reported in the newly released 1998 Year-End Monitorsm Report, prepared by The Eastern Management Group.

PBX Market Analysis

Year End 1998 PBX Total Line shipments increased 11.9% over 1997 resulting in more than 7.8 million lines shipped. Total PBX System shipments rose 8% over the prior year with a total of 31,784 Systems shipped.

Lucent captured the number one position for both Total Lines and Systems sold with 31.9% and 23.5% of the market respectively. Nortel held the number two spot in both categories with a Total Line market share of 27.8% and a Systems market share of 20.1%. Mitel continued its challenge in the Systems market and captured 18.8% of the market. NEC also showed very strong growth in Total Lines and increased its shipments by 32% compared to 1997. NEC's market share was 10.3% of the Total Lines market.

Ericsson and Cortelco Systems exhibited very strong growth in the Total Lines market for 1998 by increasing their shipments by 21% and 20% respectively.

Key / Hybrid Market Analysis

Sales of smaller phone systems known as Key/Hybrid Systems were up 4.8% over 1997 with a total of 365,389 Systems shipped. Lines associated those systems experienced growth of 6.3% to 7.1 million over the prior 12 months.

Lucent confirmed its position as the market leader and captured the number one spot in sales of both Total Lines and Systems. Their position was secured based primarily on the company's strong third quarter performance. Lucent held 21.3% of the Total Lines market and 28.1% of the Systems market in 1998. Nortel was a strong number two and captured 17.4% of the Total Lines market and 16% of the Systems market. In spite of a slight decrease in Station shipments, Toshiba captured the number three spot with a 10% market share. Panasonic's System shipments dropped by more than 25%, but it still managed to secure the number three spot in the Systems market with a 9.2% market share.

Inter-Tel was a very strong performer in both Total Stations and Systems with shipments growing 22% and 19% respectively. Other strong performers were Executone and Vodavi.

About The Eastern Management Group

The Eastern Management Group is the oldest and largest management consulting and market research firm engaged by clients exclusively in the telecommunications industry. For more information about the Monitor program or The Eastern Management Group, please call (908) 306-8800 or visit us on the World Wide Web at www.EasternManagement.com.

Contact:
Rikke H. Kasse
The Eastern Management Group, Inc.
(908) 306-8800 Phone
(908) 306-9595 Fax
Rkasse@EasternManagement.com