PBX Review

Martin Hatcher of MTV
PBX Review

Anumber of baby PBX products have been released in 2005 to target the market for systems and applications up to 20/30 extensions. It is a crowded market and one where for many years one vendor has stood out as being hugely and consistently successful – Panasonic. The mother lode for many PBX resellers can be found in the rich vein of PBX sales that make up what many call the mid market, the 50 to 80 port PBX system sale. Progressively over the years systems of this size have become more feature rich with applications becoming standard that were hitherto only available on larger products as expensive options.

Is this scenario now coming into play in the baby products end of the PBX market and is there therefore a healthy value-added applications market developing in this sector? Are customers in this sector really looking for this level of sophistication and if they are then are they willing to pay for it?

Trevor Evans, business development manager at Alcatel, “The market is becoming more customer-centric – the customers are being offered more added value and greater benefits, with products that also provide ease-of-use. Over time, this market will move over to IP.

The OmniPCX Office Compact edition was launched in April 2004 targeting the market for 8- 28 extensions. Since its launch, sales have increased each month and have reached a very high level.

IP sales are increasing more and more each month – primarily to large companies where the benefits are easier to identify. However, it is only a matter of time before IP becomes more affordable for the smaller company. Lower costs, coupled with the growth of broadband, will stimulate the market for smaller companies to move to IP.

Customers in this sector will ask for valueadded applications as long as they are easy to use, and the business benefits are easily identifiable. The fact that applications such as voice mail, softphones and mobility are embedded within the OmniPCX Office Compact makes this an ideal product for the sector.

Barry Castle, marketing manager at Samsung says that Samsung chose to release its new all-inone communications platform – the OfficeServ 7200 – at this year’s Convergence Summit. “What is interesting about this platform is that it was designed to deliver no-compromise voice capabilities with advanced data applications that include intrusion prevention, packet-shaping and policy management. Essentially this system addresses the issues that people have been grappling with like security and voice quality and delivers all of this as a single-box solution, which will be welcomed by customers and resellers alike, following various well-publicised attacks on IP telephony systems.”

Samsung believes the modularity of systems, where interfaces work all the way from small business solutions to large enterprise platforms, will directly benefit resellers looking to rationalise platforms across different market sizes.

Kipper Ties are Cool!

Let’s get back to that Panasonic issue as Martin Hatcher, Chairman of distributor MTV Telecom, believes that resellers should re-examine their attitudes towards Panasonic PBX systems.

“Those resellers who have been around for any length of time will know that the communications graveyard is littered with the corpses of pretenders to the crown that sits upon the head of Panasonic for being enthroned as masters of all they survey in the sub-100 extension market. Year after year Panasonic lead the field by turning in market shares for the UK well in excess of 20%. That is no accident and no mean feat as the likes of Ericsson (BP50), Bosch and the many others who have failed in their attempts to knock Panasonic from their lofty perch will testify.

“Like many others in the channel I attend exhibitions, trade shows and seminars up and down the country each year and observe the cognoscenti huddled together in their Paul Smith suits dismissing Panasonic products like a 1970’s throwback to flared trousers and hot pants.

“Here at MTV Telecom we take a more pragmatic view based upon years of experience in selling more Panasonic systems than you could shake a kipper tie at. Why, you might ask, are MTV Telecom and Panasonic so successful in this supposedly unfashionable quest?

“We see the reasons in simple terms – Customer Choice and Reseller Enthusiasm. What I mean by this is customers are not stupid; they know value for money when they see it and in Panasonic PBX systems they get value in spades. Likewise resellers know their customers and with Panasonic they know that should their customer want the ‘Paul Smith’ applications and options then they can have them – from Panasonic!

“So, my advice to resellers is this, ignore the fashion police, kipper ties can be cool, go sell a Panasonic and talk to the experts – MTV Telecom.”

Rip & Replace

The important fact that must be borne in mind is that the dynamics of the small business market are dramatically different to those of the medium-sized business market, corporate mid-market and MNC market. The majority of medium to large organisations have been taking an evolutionary approach to IP migration – adding IP capabilities via gateways to link sites together and to deliver IP capabilities such as teleworking, mobility, unified messaging, multimedia contact centres and collaborative working to selected user communities, whilst maintaining the TDM-PBX for the rest of the business.

“By contrast, the 20-30 extension marketplace is a rip-out-and-replace market.” Says Campbell Williams, head of solutions marketing EMEA, Mitel. “No matter how great the benefits of the next generation of platform, they are very unlikely to replace the existing platform until it has reached end of life. Moreover, this is a market segment that neither employs their own ICT staff nor keeps upto- date with industry trends. Therefore, they have always bought whatever the channel sells them. It is hard to

  Cambell Williams of Mitel

imagine a 20-user organisation ringing their local telecoms dealer and saying ‘I’d like you to sell me some IP telephony please”. Therefore, the success of IP systems in the 20/30 extension market will be almost entirely dependent upon the channel to sell IP into that market and the vendor community to package, position and price IP systems accordingly.”

There are significant benefits that IP systems can offer smaller businesses compared to traditional key systems and micro-PBXs – cost and management savings through a single box solution, fully integrated voicemail and auto attendant, and access to “big business” applications such as contact centre technology, teleworking and mobility applications such as single number solutions. Where Mitel is at odds with some of the other vendors reported here is saying that all of these features are now readily achievable at a price that is easily within the reach of small businesses.

The ‘H’ Word

Mitel does however at least mention the ‘H’ word – Hosted IP solutions, probably because they have a product ready to go – the Mitel 3600. Campbell Williams again, “Hosted IP will also have a significant role to play. This is both an opportunity and a threat for the traditional reseller. It is a threat because hosted IP solutions are designed to be both a CENTREX displacement technology and a CPE displacement technology – the former fact means that service providers are an intrinsic part of the solution and the latter means that those service providers may be targeting the traditional reseller’s market. However, closer examination makes it clear that the channel still has a significant role to play in hosted IP. Mitel has carrier partners who are providing our 3600 solution to end-customers – often using resellers either to sell the solution themselves (as opposed to selling mere broadband pipes and minutes). Other lead 3600 partners are resellers themselves, and they have contracted with a service provider to deliver the network and hosted parts themselves, whilst the reseller owns the customer, the contract, the relationship, and supplies and maintains the equipment on site.”

Williams concludes, “The future of the market is extremely healthy because the channel can gain significantly more revenue per customer, margin per customer and customer lock-in, all with the same cost of sale. It does, however, depend on the reseller community gearing up to be able to sell IP systems – whether they are CPE-based or hosted – and making the necessary skills and training investment. Likewise, the vendor community must make their small business IP offerings easy to market, easy to sell, easy to install, easy to maintain and easy to understand. It should be just as easy to sell a complete IP system that includes voice, data and applications as it is to sell a key system. That way the reseller will be more than happy to upskill and invest in IP because it will deliver higher revenue per employee benefits than selling TDM systems.”

Toshiba launched their Strata CIX Office this year, their first pure-IP product, specifically for the small to medium-enterprise (SME) market. Tim Webb, MD at Toshiba BCD believes there is a great opportunity for resellers at this end of the market. “Initial response to the product has been very positive, and we’ve got some great sales under our belts in just six months.

“Generally, IP sales have definitely moved down to the smaller end of the market in 2005, and we’ve seen many more IP shipments at the 20-30 extension range. I think now the technology has been tried and tested at the enterprise level, SMEs now have a good idea of what works, not just in a technical sense, but in terms of how IP can create a business solution. For this reason, we see IPT taken up by SMEs particularly for remote working and to support distributed business.”

Webb concluded, “Similarly, one of the key applications this year has been CTI. It works for the reseller as a value-added sale, but is taken up by the customer because it offers real productivity gains. Deploying CTI for informal contact centres can deliver genuine competitive advantage for SMEs, which is what our Strata systems are designed for.”

No Budget!

When it comes to business telephony, smaller organisations are looking for the same features, functions and applications as those taken for granted by Enterprise companies, to give themselves a competitive edge – what they lack is the budget to match.

Robin Hayman, SpliceCom’s Director of Product Management says that with maximiser, SpliceCom has the luxury of a genuine 21st Century, pure IP, telephone system as a foundation upon which its very easy – and cost-effective – to add advanced business-enhancing applications. Once again we’re delivering Enterprise features to small and medium-sized businesses at a price they can afford for the first time.”

Hayman lists; GSM Mobile Extensions, home working using IP, analogue or mobile phones, Dual Ringing supporting off-switch phones, Unified Messaging for email systems other than Microsoft Exchange, SMS at the desktop and support for Apple Mac environments as integral features, unique to maximiser, delivered as standard and for no extra cost. In addition the SpliceApp range of Business Information Tools – SpliceQueue, SpliceLog & SpliceRecord – give company directors and departmental heads the ability to see how their specific area of the business is performing in realtime and review how they performed in the past including listening to individual call recordings.

‘We’ve been able to add all of these features because of our pure IP architecture,” continues Hayman. “Those competitors of ours offering traditional TDM, IP-Enabled, or even IP telephone systems based on late nineties designs, will require external servers if they want to add similar functionality – basically they have to develop external ‘bolt-ons’ rather than an integrated and integral solution because the telephone systems weren’t originally designed with today’s expanded role in mind. This adds both complexity and price and essentially puts the customer benefits of such features beyond the reach of smaller businesses.

Embrace Disruptive Technology

In a similar vein to SpliceCom, Aastra Telecom says that for many small to medium-sized businesses, IP Telephony has been seen as a ‘would be extremely beneficial but can’t justify the cost’ option. “However”, says Product Manager Mike Ballantine, “Aastra’s IntelliGate 6.6 utilises existing onboard technology, resulting in a 70% reduction in the capital cost of entry level VoIP. Businesses with satellite offices or home workers can all be connected via Broadband giving free internal calls and the impression that everyone is working at the same location. All that is needed is an Aastra IP PBX extension telephone to enable staff to become an integral part of the overall telephone system and take and make calls with full PBX functionality as if they were sitting in the main office. All the features of the PBX including voice mail and CTI are available to the home worker.”

Aastra has generated some noise recently, quite rightly so in our opinion, about QoS for DSL and has recently announced a deal with Tiscali for their QoDSL product.


Reseller Comment

Tony Corlett, Director of Networks for MiTech, says the most significant technology developments we have seen this year, both from a vendor and a customer point of view, are presence management and collaboration software applications over converged IP systems, which are fuelling PBX sales.

“The capabilities of presence management is growing all the time, and the benefits of the technology are immediately recognised by users because it gives them more control at a very granular level. For example with intelligent call routing the software will detect if a user is in meetings by looking in his calendar and direct his calls to voice mail. The tool also allows users to direct certain urgent calls to their mobiles instead of their voice mails.

“Collaboration tools which allow virtual teams to chat securely, share documents and conduct video conferencing calls wherever they are have also been key applications this year. All major vendors are now offering these software applications, and I expect them to be a key area for growth in 2006.

“SIP is playing a key part in the adoption of these software applications, as it brings convergence to the application level. The industry has mainly been concerned with converging voice and data, but converging applications is the hot topic and will be a considerable market driver over the next couple of years.

“Building further intelligence into PBX and handsets will also help drive business. Next year we’ll see combined GSM / wireless IP handsets, which will allow least-cost routing. The phones will be able to switch to whichever network is most appropriate, and give the user options when in an IP environment to deliver presence management features. These will help bring significant cost savings to companies.”

Market Performance:
Strong Hybrid and IP PBX Sales Drive PBX Market Up 12%
“This was a very solid quarter for the PBX market,” said Matthias Machowinski, directing analyst at Infonetics Research. “All vendors had a positive quarter, and most of them grew in the solid double-digits. The battle for IP PBX line market share continues, with Nortel leading and Cisco passing Avaya this quarter.”

2Q05 Highlights

The top IP PBX system vendors for worldwide lines shipped are the same as last quarter:

• Alcatel is number-one, followed by Nortel, Avaya, Cisco, and Mitel

• Worldwide PBX/KTS unit shipments totaled 131,000 in 2Q05, up 13% from 1Q05

• TDM makes up 49%, hybrid 42%, and pure IP 9% of worldwide units shipped

• Hybrid PBXs account for 58% of total PBX/KTS revenue, TDM 26%, and pure IP 16%; by 2008, hybrids will grow   to 69% of the market, pure IP will increase to 23%, and TDM will drop to 8%

Further Information:
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