VoIP Killed The PBX Star

By RICH TEHRANI
President & Group Editor-in-Chief

VoIP is responsible for the biggest threat to the PBX market since – well ever. Other than a slow economy the PBX market had no threats. Sure Centrex was a threat at some point but ILECS never really excelled at selling the service and as such it was never so competitive.

For the first time ever technology has become a serious threat to PBX companies. Right now that same technology, VoIP is enabling PBX sales to boom. Avaya, Cisco and many others are making a killing selling VoIP enabled PBXs.

Soon, this party may end. There are so many threats to the PBX companies, they better be careful and planning continually for the future. You can be wiped out literally overnight if you aren’t careful. Here are the threats you need to consider.

Open Source

Asterisk is gaining massive amounts of traction. Since I wrote the first story on Asterisk almost two years ago, I have been deluged with questions and interest about the company. They are gaining so much prominence that even VoIP behemoth Intel is making deals with the company and others are dying to get involved with them.

Solution

A number of PBX and ACD companies – both new and existing are rolling out new products based on Asterisk. They are adding value to the platform and hoping this differentiation will allow them to benefit from the Asterisk/open source trend.

See this is a viable strategy and while you may have to do with less margin you will need these products in your portfolio to be competitive.

Hosting

Is this a real threat? Read my thoughts on hosting for details on this one. Don’t worry too much about hosting at least no for the foreseeable future.

P2P VoIP

Nimcat Networks and Popular Telephony have p2p technology that can be embedded into corporate telephones and can grow with your company. I warned that companies like Dell will soon be able to leverage this technology to become major telecom players. I said this would radically change the telecom landscape.

Solution

In response Avaya purchased Nimcat Networks. Popular Telephony should be picked up by Cisco. I have no inside information on this deal but it is an obvious move for the networking leader.

Dell will soon sell enterprise phones whether the industry likes it or not and Avaya and Popular Telephony would likely be thrilled to OEM phones for Dell the way Lexmark OEMs printers. This will make life difficult for everyone else. The only solution is to come up with a p2p solution first and not wait for Dell to eat your lunch.

The El Cheapo PBX

Linksys and other low-end SMB equipment providers will be offering pretty full featured PBXs at cut rate prices. Some of these devices will work in tandem with a hosted back-end and others won’t. The one problem for the likes of Nortel, NEC and others is the price. You will be able to pick these devices up for hundreds or at most a few thousand dollars. They will compete in features and functions with PBXs costing 5-10 times as much.

Solution

You can come up with a cheap PBX and give up valuable margin if you like. Epygi seems to be making a nice living selling inexpensive PBXs. For most PBX makers the lack of margin will make this solution unacceptable.

The only company that has a real solution with margin is Vonexus. They are integrating their PBX so tightly with Microsoft software that you aren’t sure where the PBX ends and MS Office begins. This tight integration will be tough to duplicate by the el cheapos.

This company really embraces the concept of Just in Tome Communications or JITC.

The Enterprise Skypes

It is only a matter of time before we have enterprise Skype-like software that does everything a corporate PBX does today. Imagine having all the benefits of a PBX with no hardware to purchase. I can’t imagine a more serious threat to established PBX players.

Solution

Do it first or say goodbye. If you have a healthy PBX business go out today and get VC money and come up with a software-only solution. Do this rapidly and come up with a viable business model to ensure you block new entrants.

One thing is for sure. VoIP has enabled PBX makers to have some relief from the brutal economy of 2001-2003. The party will last but it won’t ever be the same market again. You need to be faster than you ever were before. You need to be ahead of every curve. You need to monitor the market like a hawk. If you wait, hesitate or don’t stay on top of things – you will find yourself at the bottom pretty quickly.

-----

Rich Tehrani is President and Group Editor in Chief at TMC.