IAX is a VoIP protocol that is used by
Asterisk (an open source telephone platform). It provides two key advantages over SIP. One is simplicity. IAX does everything it needs through one "packet" type. Two, it allows for MUXing calls together. What I mean by that is that you can "trunk" calls together as we did in the "original" days of the web. multiple channels are delivered in one IAX packet. This allows for us to have higher call volume in the same amount of bandwidth. IAX also provides for a robust security infrastructure using PKI or username/password. The one port means that it is easy (read: cost advantage) to run IAX on the WAN since there are none of the issues with having to "synchronize" two port sets. Finally, IAX provides for a better use of bandwidth since it use "mini-frames" to send the realtime media. I am not saying that IAX will "beat" SIP. However, we found that in the trials we did, SIP is more cost efficient for LAN traffic (since the hardware is much cheaper due to scale) and IAX is more cost efficient in the WAN due to reduced support tickets and better use of bandwidth.
Here is a better write-up of what I am talking about :-)
ZDNet Ou Blog