Global companies are undergoing a paradigm shift. They’re moving from traditional phone lines to cloud-based telephony. Cloud-based technologies support more cost-effective and hardware-independent voice communications options. But voice represents only part of modern business communication needs.

Since the 1990s, voice over internet protocol (VoIP) telephony has captured the lion’s share of attention in this field. It is among the most successful methods for global voice communications. That’s especially because it supports a more mobile workforce. North America alone will capture 40% of the global VoIP market share by 2025. Globally, VoIP may overtake traditional public switched telephone networks (PSTNs) during this time as well.

But VoIP isn’t the only cloud-based communications technology you need to consider. Session initiation protocol (SIP) is also among today’s most important contributors to cloud-based business communication. Both VoIP and SIP represent internet-based alternatives to traditional telephony. As we will find, they share some important similarities and overlap in their use cases.

Still, SIP and VoIP are different in fundamental ways. Specifically, VoIP is a voice-oriented technology. SIP is a multimedia communications protocol. There are key advantages and disadvantages between the two systems as well.

What Are SIP and VoIP?

Understanding SIP vs. VoIP helps you determine whether either is right for your business. You may also find both are relevant for your existing and future business needs. A deeper understanding can help you decide which communications provider is best for your company.

VoIP at a Glance

VoIP is an alternative to traditional telephone lines. It allows users to make phone calls over the internet. Companies invest in VoIP as a networked alternative to more costly telephony systems. VoIP requires no specific hardware. It allows employees to send messages over the internet or an internal network with nearly any device.

VoIP also goes by a number of other names, including:

  • Voice over broadband
  • Broadband phone service
  • Broadband telephony
  • Internet telephony
  • IP telephony
  • IP communications

SIP at a Glance

SIP is a system of coding rules. It is a text-based protocol utilizing UTF-8 encoding. That is, it uses the Unicode transformation format (UTF) and 8-bit blocks for real-time communications between groups and individuals.

SIP providers enable their clients to initiate, carry on and terminate real-time communications over the internet. Unlike VoIP telephony, which supports only voice, SIP supports voice, video and instant messaging.

What Are the Key Differences Between VoIP and SIP?

Business leaders often compare VoIP and SIP when choosing a new communications platform. But there can be no direct comparison between these two systems. VoIP describes an internet-based phone service. Each provider has its own unique software for companies to consider.

Meanwhile, SIP is a communications protocol. Many VoIP providers use this protocol for their VoIP deployments. However, some mainstream VoIP platforms—such as Google Voice—do not use SIP at all.

As indicated, VoIP best supports voice communications between single parties. SIP, on the other hand, supports a broader set of applications. SIP supports multimedia conversations between multiple parties, including voice, video and instant messaging.

How VoIP Works

VoIP is an informal term that refers to any phone system that uses the internet instead of traditional phone lines. VoIP uses data connectivity via the internet to transmit voice packets between users. Modern cloud-based VoIP is widely popular for its data capacity, flexibility and extensibility.

With VoIP, users can place a call from a computer, a special VoIP phone or a traditional phone with an adapter. When someone uses VoIP to call a regular landline, the internet-based signal converts into a regular phone signal before reaching its destination.

Users can install VoIP software on their smartphones. They can connect via cell towers or wireless hotspots like those found in airports and cafés. As with other devices, VoIP uses these signals to transmit data packets. The data packets are reassembled into audio when they arrive at their destination.

One of the main attractions of VoIP is its affordability. Because VoIP calls are transmitted over the internet, it’s more affordable than traditional calls. That’s why companies find VoIP has distinct advantages over traditional PSTNs. Most domestic and international calls are free, even when calling landlines.

VoIP systems also come with unique digital features. They allow companies to add phone lines, engage in conference calls and direct calls to mobile phones at little or no additional cost. Some VoIP providers support advanced features, such as call recording and transcribing.

VoIP is highly popular among growing businesses. But large companies are transitioning from legacy to VoIP telephony systems, too. VoIP is also becoming popular for residential users. This is driven in part by the global growth in remote workers, many of whom work from home. VoIP is ideal for enterprise-grade telephony capabilities in home offices. Such capabilities include voicemail, conference calling and call forwarding. VoIP offers pricing advantages over traditional home landlines as well.

The most robust VoIP systems allow users to call anyone with a phone number. This may include local, mobile, long-distance and international numbers.

How SIP Works

While VoIP is a business category composed of several competing providers, SIP is a formal signaling protocol that supports VoIP. Specifically, SIP is the Internet Engineering Task Force (IETF) formality for VoIP and other multimedia and text sessions such as online games, instant messaging and videos.

As a protocol, SIP enables users to make free video and voice calls. A SIP session can connect two or more participants. SIP decodes VoIP data, allowing receivers to hear the caller’s voice. But in addition to VoIP, SIP can initiate, modify, maintain and terminate real-time messaging, video and other communication methods.

It’s important to remember that there are other protocols that support VoIP. A SIP phone system is just one option. But it’s among the most frequently used protocols for VoIP today. Most unified communications as a service (UCaaS) vendors use SIP to support multimedia communications, including VoIP.

SIP text-based language is similar to the HTTP protocol used for transferring files over the internet and the SMTP protocol for sending emails. In practice, SIP coding describes the identity of participants in a call and how these participants can be reached over an IP network. SIP can support two or more communication endpoints. This is commonly seen in joint video conference calls widely used in business today.

SIP sessions can be initiated over computers or special phones. SIP phones use a modem to connect to the internet. This makes SIP preferable for companies who require a multimedia presence—when employing remote workers, for example.

In addition to being free globally, users can get many SIP addresses and SIP apps for free. Also, there are no restrictive laws pertaining to SIP telephony.

How Do SIP and VoIP Work Together?

Despite their differences, VoIP and SIP overlap in several ways. Softphones, often called SIP telephones for their use of SIP, connect devices to VoIP networks. A single softphone is associated with a single user’s phone number that a user can employ across multiple devices.

Softphones integrate via a computer- or cloud-based network hub, freeing phone numbers from commitment to a single device. This is their clearest distinction from traditional landlines. However, VoIP adapters allow phones traditionally used with landlines to use softphones as well.

When SIP and VoIP work together, they can offer clear advantages for businesses. They allow companies to consolidate technologies via unified communications (UC). Communications methods that SIP supports can integrate with other business cloud applications, such as customer relationship management (CRM) systems.

In this case, users can share data via SIP-supported platforms. VoIP and SIP as part of a UC solution help companies consolidate administrative tasks associated with video, voice and instant messaging.

In fact, SIP continues to support VoIP and other unified communications across the globe. In 2019, SIP trunking technology held the largest share of the roughly $15 billion VoIP market. The VoIP market will likely double by 2025, and SIP will make up a substantial part of this growth.

The Pros and Cons of SIP vs. VoIP Systems

Shared adoption of SIP and VoIP has become common. Companies should consider the pros and cons of each system when identifying the best communications solutions for their business. For example, SIP trunking transfers multimedia data, including voice, video and text. VoIP uses other protocols for voice communications only.

Here are the business advantages and disadvantages of these two protocols:

Advantages of SIP

  • Switching to SIP provides immediate cost savings and access to new features. These include video, instant messaging and better voice calling. Added features can come in the form of integrated productivity tools, such as CRM
  • SIP signals can be integrated with other protocols. Companies may require other protocols for integration with business applications, ancillary software or future UC systems they may adopt
  • SIP systems are processed using resources on each user’s system. This allows for greater bandwidth use and higher call volume

Disadvantages of SIP

  • SIP is flexible in terms of the hardware companies use for communications. But some hardware investments are still required. Companies need routers for internet connectivity. They need audio and video devices. They may also need mobile phones and PCs to get the most out of their cloud-based SIP software
  • SIP requires some level of investment in IT operations. Besides company-wide installation, business users may turn to internal IT teams when they encounter problems with their SIP applications

Advantages of VoIP

  • VoIP requires a much lower upfront investment compared to traditional telephony systems. VoIP often has flat monthly rates for billing, even when users make international calls. This makes the ongoing savings from VoIP investments more predictable
  • VoIP requires no on-site installations. A softphone (i.e., SIP phone, in some cases) allows a user to access their phone number from any device
  • VoIP is flexible and supports features like call holding, call transfer and conference calls. It's also adaptable, as you could add features without purchasing additional hardware
  • Both employees and customers enjoy greater flexibility with VoIP systems. Employees can make intra-department calls. Customers can call customer service teams without encountering busy signals, for example
  • Ongoing savings from VoIP investments free up business capital for other initiatives and investments

Disadvantages of VoIP

  • VoIP alone may not support multimedia communications
  • VoIP hosting services route signals through a central network, which can tax systems when call volume grows too large
  • Poor internet connectivity can affect the quality of VoIP calls. Some VoIP services are affected by power outages as well
  • The quality of VoIP solutions varies from provider to provider

In general, these distinctions make VoIP more suitable for one-on-one voice conversations. Meanwhile, SIP is suitable for multi-party, multimedia communications.

Getting Started With Your SIP VoIP Investment

In today’s business communications, voice calls are no longer enough. So anticipate the changing expectations of your customers, employees and partners. Phones remain a critical tool for communications. But consider video, instant messaging and other multimedia tools as you look towards new unified communications providers.

You can get started today with an investment in SIP-based VoIP services. VoIP telephony has clear advantages over traditional business telephony. It is a straightforward alternative for your existing and future companywide voice communication needs.

8x8 for VoIP and Unified Communications

8x8 puts the success of your company front and center. We work hard to keep our solutions affordable and able to meet the future demands of modern business.

When it comes to VoIP, 8x8 provides a reliable and compliant cloud solution at a demanding level rarely seen by other cloud providers. Don't take your chances with a subpar cloud-based telecom system. Call 1-877-406-4113 or request a no-obligation quote from an 8x8 product specialist.

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