The IP telephony market has been subject to publicity due to the recent increase of users worldwide. Although not a new technology, given that IP telephony was developed in the mid-nineties, it lately became popular as a lower-priced alternative to fixed telephony through the availability of high bandwidth networks. While prior studies focused on technical aspects such as quality of service and regulatory issues, little attention has been paid to the vendors’ perspective in the IP-telephony market. In this paper we argue that by using the innovation diffusion theory to examine the supply rather than the demand side of IP telephony, we can get a better understanding of existing market dynamics and future trends. We draw our conclusions based on a study of the IP-telephony market in Denmark where we interviewed the major providers. Our results indicate that the main concern for vendors is task complexity, which along with existing difficulties in task and technology compatibility seem to drive a shift of their interests from offering basic telephone call services to more advanced ones, such as video telephony. We believe that our research can be useful for the study of technology diffusion in general and IP-telephony in particular.