Tag Archive for: PBX

Despite Improving Economic Conditions Enterprise PBX Market Continues Slide

Campbell, CA (March 10, 2015)—Technology market research firm Infonetics Research, now part of IHS Inc. (NYSE: IHS), today reported that the global enterprise telephony and unified communications (UC) market closed down 4 percent in 2014, to $8.7 billion, as businesses continue to hold off new purchases and upgrades of PBX equipment despite improving worldwide economic conditions.

Infonetics chart
The overall market decline masks the health of the evolving UC applications segment, which jumped 20 percent in 2014, energized by the demand for tools to increase workforce productivity.

The data comes from Infonetics’ fourth quarter 2014 (4Q14) and year-end Enterprise Unified Communications Voice Equipment market share, size and forecast report, which tracks PBX phone systems, voice over IP gateways, UC applications and IP phones.

“The enterprise telephony market continues to be tough. Just as we see one area begin to improve, it’s offset by slowdowns in geographies or market segments. Underscoring the declines are not only slowing businesses purchases but also competitive pricing, which has created unpredictable swings,” said Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research, now part of IHS. “The move to the cloud is having an impact in certain markets, particularly North America.”

MORE ENTERPRISE TELEPHONY MARKET HIGHLIGHTS

  • Globally, PBX revenue, including TDM (time-division multiplexing) and IP PBXs, dropped 6 percent in 2014 from 2013, and dipped 1 percent in 4Q14 from 4Q13
  • PBX line shipments declined 3 percent in 2014 from 2013; In 4Q14, line shipments were up 4 percent year-over-year, driven by pure IP PBX
  • Vendors remain in a battle to gain customers and hold onto existing ones as enterprises migrate to IP and UC solutions: In 2014, the top four PBX revenue market share leaders were, in alphabetical order, Avaya, Cisco, Miteland NEC

Microsoft continues to see strong sales on the UC front, solidifying its position atop the unified communications market share leaderboard

Enterprise Telephony Market To Shrink 20 Percent; Cisco, Avaya Will Grow

By Mark Haranas on July 31, 2015

The enterprise telephony market will shrink about 20 percent within the next few years as enterprises move their IT dollars away from premise solutions toward the cloud, although vendors like Cisco and Avaya continue to see growth through on-premise solutions.

The market is expected to decline from an estimated $10 billion in 2015 to $8 billion by 2019, with its peak hitting $16 billion in 2007, according to Dell’Oro analyst Alan Weckel.

“Having premise equipment is less and less important. Those functions are just going to be integrated into other equipment or come from the cloud,” said Weckel in an interview with CRN. “Although on the enterprise side as you get to scale, the ability of having thousands of connections to the cloud for voice really doesn’t make sense. So the enterprise market will have a different transition.”

Dell’Oro is still predicting IP phone growth over the next five years from both PBX vendors like Cisco, Avaya and Alcatel-Lucent Enterprise, as well as from third parties, such as Polycom and Grandstream.

Weckel said enterprises will pick some cloud pieces to use, but, ultimately, the call control will stay premise-based, because for companies with thousands of employees having everything from the cloud “just doesn’t make sense.”

“Cloud makes sense for a lot of SMBs, and the large middle-size companies, but when it gets to thousands of employees, it makes sense to have premise-based solutions,” said Weckel.

“The large vendors, a lot of them are growing through acquisitions and consolidation … If you look at Cisco, they were looking at selling to cloud providers to grow. So using Cisco equipment for the cloud offering, that will be a strategy vendors will use to expand the market — so not selling to the premise but selling to the cloud,” he said.

Analysts said enterprise vendors must create more unique cloud offerings in the telephony market by both selling equipment to support cloud build-outs and by creating stand-alone cloud offerings.

“If you’re a vendor and you don’t have a cloud strategy today, it will be too late,” said Zeus Kerravala, principal analyst at Westminster, Mass.-based ZK Research. “Now it comes down to how aggressively a vendor would be willing to cannibalize its premises-based business in favor of the cloud, how they compensate the channel and how they transition partners.”

“If channel partners do not have a plan in place today for cloud, they will be obsolete in five years,” he said.

Kerravala said ShoreTel has its own cloud offering and cloud partner program that allow the channel to sell its suite of cloud-based VoIP services, while Avaya is enabling its cloud partners to build a cloud rather than offer one directly.

“What’s important is that the vendor plays in the cloud-collaboration market regardless of whether they choose to build, enable others to build, or both,” said Kerravala.

Jamie Wood, executive vice president at Avatel, a Brandon, Fla.-based Avaya partner, said Avaya is ahead of the game with the Avaya Collaborative Cloud open platform solution for partners and customers.

“They provide the options to build, deliver, use, or enhance an organization’s cloud communication services and applications,” said Wood. “[The platform] was designed to support the transition and lives seamlessly alongside the on-premise solutions that organizations retain.”

Wood said the move to cloud communications will be a gradual evolution, and opportunities for solution providers are biggest in the midmarket.

Analysts said solution providers need to expand their level of expertise in cloud or face extinction.

Russ Zielezinski, chief operating officer at Advanced Telecommunications, a ShoreTel and Mitel partner based in Naperville, Ill., said 2015 has been the biggest market shift to the cloud ever.

“It’s been a challenge for us, who were founded as premise-based providers … It has impacted the premise market, and I can say we’ve seen it affect our numbers too,” said Zielezinski. “But for survival, you need to adopt a new cloud-recurring revenue model.”

Zielezinski said solution providers need to become cloud-focused and have the proper amount of technical staff on board to support all the different applications.

Organizations are selecting cloud over premise because companies are more comfortable with using OpEx dollars compared to spending a large sum of money up front for the equipment, according to Weckel.

“So the cloud allows them to pay on a monthly basis, which is just easier from a consumption point of view,” said Weckel.

In addition, cloud solutions are easier for SMBs because they don’t have to overprovision their systems, and it is also typically easier to manage.

“There’s a lot of opportunities there if the VARs and channel expand into adjacent areas around cloud,” said Weckel.

“It’s more than just voice. [Customers] are probably thinking about updating their entire networking, maybe going with a cloud-managed solution there like a Meraki solution for wireless and switching. Maybe they’re thinking about some cloud computing whether it’s Amazon or Rackspace — there’s a lot of opportunity to rewrite applications, write new applications and sort of become the trusted consultant to the customer.”

OPEX vs CAPEX

CapEX Pic (color)As strange as it sounds these days, there was a time that if you wanted to start, or grow a company, and you needed telecommunications services (phones, voicemail) you had to think about physical facilities (closets), network circuits, and buying your own hardware.

Today, however, none of that is necessary. It is possible to just log into your favorite hosted service provider (Amazon, 8×8, etc.) and pay for the services you use.  It doesn’t cost hundreds of thousands of upfront costs and best of all you don’t have to become an expert in all things telecom – you can focus on your business.

The -aaS market (as-a-Service) didn’t exist many years ago. You couldn’t just buy infrastructure-as-a-service you needed to invest cash up front.  This has led us to the increased discussion around OPEX vs CapEx.

Definition of OPEX

The trend in the telecom and IT industry now is to go “OPEX”.   So what exactly is OPEX?  It stands for Operational expenditure and refers to expenses incurred in the course of ordinary business, such as sales, general and administrative expenses (and excludes things like taxes, depreciation and interest).

Accounting treatment:  Operating expenses are fully deducted in the accounting period during which they were incurred.  If you pay $1,000 a month to a service provider for phone services the full amount shows up as an expense the month you pay or consume that service.   This shows up as a line item on the P&L.

Operating expenditures include maintenance and repairs, advertising, office expenses, supplies, professional fees, utilities such as telephone, insurance, property management, property taxes, travel, commissions, salary and wages, and other similar items.

Definition of CAPeX

Capital expenditures are expenditures (usually large 1 time items) creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing asset with a useful life that extends beyond the tax year.

Accounting Treatment:  CapEx expenditures cannot be fully deducted in the period when they were incurred. CapEx assets are depreciated (or amortized) over time.

Capital expenditures tend to be major investments in goods, which show up on the balance sheet and are depreciated over the life of the asset, typically 3 – 7 years.

Example:  Once you have purchased a capital good (such as a PBX), you’re stuck with it.  As anyone who has purchased a car understands, even if you’re no longer excited about owning it, the finance company still expects a monthly payment. However, if you rent a car, you are committed to it only as long as you want to use it – and once you’ve paid for that use, you have no further financial obligation.

So what should a Telecom Manger do?

As an IT or telecom manager what you deploy today may not be what you want in 3 years from now. What once required dedicated real estate, dedicated employees and lots of upfront cost can be fulfilled remotely via the cloud with a subscription fee for the service.

Organizations have more options to obtain the latest and greatest technology. They can focus on their core competencies and transition many of their CapEx investments to OPEX spending, freeing up cash for those investments and other projects that drive revenue and growth.

Organizations usually want to direct their investment toward revenue-generating activities. This is why many organizations prefer to lease rather than purchase — they don’t want to tie up important capital.

Final thought:  It’s no longer as simple as “on premise equipment” = CAPEX and “off premise cloud” = OPEX”. More flexible, OPEX funding arrangements are available for most IT architectures from on premise to hybrid to public cloud. An on premise “private cloud” infrastructure can be sold as OPEX, to provide an off balance sheet transaction. Combined with Managed Services from a quality vendor, it provides the infrastructure and administration for a predictable monthly fee, and allows you to focus on your core tasks.

Cloud 101

Cloud PictureEveryone seems to be talking about the cloud these days.   Poll after poll says companies and governments are moving a significant (or plan to move a significant) part of their IT and Telecom support to the cloud.

The definition of “the cloud” is a little bit like the definition of “being green”.   It depends on how you look at it.  Is an electric car (Tesla or Leaf) green if its batteries are charged by a coal power plant?  It depends:  It is true that the car emits zero emissions while it is moving, however it produced hundreds of pounds of CO2 while its batteries were charging from the coal plant.

The cloud is the same.   Most vendors have rushed to rebrand their products and services as a cloud offer.   Why?   Because there is a fundamental belief by large and small enterprises and governments that the cloud is good.

Why the cloud is good:

  1. First, and by far the most important, is the belief that it will save an enterprise money.  If it costs more to move your computers, storage or telephony out of your own data centers you would not do it.   The cloud must save money for it to be adopted.  A cloud solution can save an enterprise money if it has:
    1. A leveraged infrastructure – 1 server or 1 PBX supporting multiple customers.
    2. A leveraged facility – one data center with cooling, electrical supporting multiple customers
    3. A leveraged application – 1 contact center application (software) supporting multiple clients
    4. A leveraged support team supporting multiple clients.
  2. Second, is by paying for only what you use – the Electric grid is a cloud. You pay for what you use when you turn on your lights.   If you had to build your own power plant it would cost you a fortune – so you and others leverage the grid.
  3. Third, is by providing the latest and greatest – a cloud provider can keep you current on the latest release so you don’t have to manage and update your systems constantly and the new features and functions of the applications can provide value to your organization.

In the end most of the items above boil down to cost savings or added value.   If an Enterprise really wanted to they could invest and do everything a full featured cloud provider does but it is less expensive to outsource that to a cloud provider.

When is the cloud NOT the cloud?

Many vendors rebranded their products over the past few years to say they are a cloud offer.   They want to latch on to the positive cost saving attributes of a true cloud offer.  But like in the example of a green product you have to look into the cloud to see if it is real or not.  Types of clouds:

  1. Private Cloud – This is a 100% built infrastructure for a single enterprise. In prior years this was called outsourcing, dedicated hosted or managed services.   Those models have value in many cases but the key one that truly makes the cloud unique – leverage – does not exist in this model.  It is a single solution for a single user.
  2. Hybrid Cloud – This is just a funny term coined by some to mean that some of the infrastructure is leveraged “in the cloud” and some of it is dedicated to a single customer.
  3. Public Cloud – This is the true space for the cloud offer that allows the provider of the cloud service to leverage, people, process, equipment, software and facilities to prove a lower TCO to the user.

The cloud can be a great thing for your business if it is truly a cloud offer that provides the cost and services benefit that a true cloud offer brings.   Just be wary of any vendor pitching their product as green or cloud.   Because it depends.

Cisco, Others Face Tough Competition From Microsoft

The PBX is losing its grip on the enterprise.

Infonetics Research said this week that unified communications (UC) investments are replacing typical PBX purchases, with North America losing the most PBX market share: The region is down double digits from 2013’s third quarter, Infonetics found.

That’s because businesses are holding off from buying new PBXs as they evaluate cloud alternatives and put money into UC applications, instead of PBXs.

“There is competitive pressure as well, but not as much as in the past,” said Diane Myers, principal analyst for VoIP, UC and IMS at Infonetics Research.

Worldwide, the PBX market – which includes TDM, hybrid and pure IP – dipped 7 percent year over year in the third quarter of 2014, but it has risen 5 percent sequentially, according to the research firm. Still, compared to a year ago, PBX license shipments have dropped 2 percent. Around the globe, PBX revenue leaders are, in alphabetical order, Avaya, Cisco and NEC, Infonetics said.

But those companies face tough competition from UC suppliers, where Microsoft, purveyor of the Lync platform, stands out as the frontrunner, said Infonetics. To that point, UC applications jumped 21 percent in 2014’s third quarter, compared to the year-earlier period.

November 25, 2014 – By Kelly Teal

Microsoft’s Lync surging as PBX choice in North America

Orlando — Microsoft’s Lync communications platform is making big gains as the IP PBX of choice, particularly in North America and particularly among larger businesses, Enterprise Connect attendees were told.

Lync ranks 11th worldwide among IP PBX vendors, but comes in No.3 in North America among businesses with more than 100 phone extensions, according to Peter Hale, principal analyst with MZA, speaking at the conference.

“Microsoft has gone from nothing to third in two to three years,” says Jerry Caron, an analyst with Current Analysis. “It’s become a very significant player in a very short period of time.”

Cisco ranked first worldwide, edging out No.2 Avaya by just 1 percent, but in North America among large businesses, it blew away the field. Cisco sold 44 percent of the phone extensions, he says, with Avaya pulling down 20 percent. Microsoft landed 13 percent, Hale said.

The number for Lync represents phone extensions actually deployed, not those sold, he said. Because Lync comes bundled with other software and includes communications besides IP telephony, the number of licenses sold is actually higher, he said.

One problem Lync could face is the decline of the PC, Caron says. Part of its success so far may be that most corporate desktops run Microsoft software. As businesses use other devices, notably mobile devices, for their main computers, that could change, he says.

Cisco’s worldwide lead in phone extensions is slight and fragile. It holds 13 percent this year, down from 14 percent last year. Avaya is breathing down its neck at 12 percent, the same percentage it scored last year.

Cisco dropped 2 percent in its North American large-business sales from 46 percent to 44 percent from 2012 to 2013, Hale said. During the same period Avaya went from 19 percent to 20 percent. Microsoft went from 12 percent to 13 percent.

Author:  Tim Greene @ Networkworld

 

Keeping the Nortel CS1000 Alive

Avaya’s announcement of a “final release” of Nortel CS1000 at version R7.6 appears to have left these customers with one choice: rip and replace.

Enterprises that have Nortel CS1000 platforms and phones were hit hard by the Nortel’s bankruptcy. When Nortel’s telecom related assets were acquired by Avaya and GENBAND, the CS1000 customers became dependent on Avaya for ongoing upgrades and maintenance. Avaya’s announcement of a “final release” of CS1000 at version R7.6 appears to have left these customers with one choice: rip and replace.

Rip and Replace
The rip and replace solution presents several problems for the CS1000 owner. First, there is the expense of a new platform; in most cases new servers will be required. There certainly will be new software, management tools, operational procedures, and re-training of IT staff.

Beyond the core platform, there is also their considerable investment in desk phones. Many enterprises have proprietary Nortel TDM and/or Nortel UNIStim IP phones that are not supported by other vendors. With nearly half the cost of an upgrade tied to desk phones, replacing endpoints can be one of the biggest costs, and, of course, every new phone requires an end user to be retrained. And, since CS1000 customers have felt the pain of being tied to one vendor, standards-based SIP endpoints are in-demand.

The technicians that support the CS1000 and UNIStim phones are also moving on: either retiring or learning new systems. As CS1000 technicians refocus on other platforms, their numbers dwindle, impacting availability. As time goes by, the shortage in expertise and parts drives up maintenance fees.

Users will have to be re-trained. New apps will need to be introduced that essentially replace the CS1000 apps. UNIStim phones will have to be replaced. Moving to Unified Communications will be limited unless the CS1000 is eliminated.

IT’s Goals
Given the expense and complexity of rip and replace it’s no surprise that this is not a CS1000 owner’s first choice. An IT team’s goals for the continued life of the CS1000 are likely to include:

  • Extending the life of legacy UNIStim endpoints that can’t be converted to SIP
  • Building a true SIP-based solution
  • Maintaining feature transparency, thereby saving staff time and retraining users
  • Using the enterprise network or Cloud-based service
  • Adding Mobility (smart devices)
  • Offering UC to a range of endpoints (PC/Mac, tablet, phone)
  • Adding Video & Collaboration
  • Supporting Advanced Messaging

A GENBAND Solution
GENBAND has acquired Nortel’s carrier assets. Using their acquired intellectual property theyhave introduced three alternative paths for the CS1000 owner. All three pathways extend the useful life of the CS1000. The pathways not only allow the retention of the CS1000 investment, they also permit the addition of new capabilities for the users.
ScreenShot002
Three GENBAND Solutions

Wrap the CS1000 with a Cloud Overlay
This solution uses the GENBAND cloud-based service called NUViA™. NUViA™ is an enterprise-class Unified Communications as a Service designed to eliminate the need for premises-based session/call control. It is powered by GENBAND’s EXPERiUS™ solutions which is a platform that ties its heritage to the Nortel MCS platform.

NUViA services can overlay the CS1000 implementation without replacing the existing CS1000 hardware or software. It offers an overlay of UC, video and mobility applications on top of the CS 1000. The enterprise is free to use as little or as much as they want since it is sold on a per seat basis.

Migrate Endpoints to Cloud Based Core
This path expands the NUViA cloud based solution. The enterprise re-registers the UNIStim IP or SIP phones into the cloud-based NUViA system. The DID’s can be moved into SIP or cloud connections or can be maintained on premise gateways registered into NUViA. This allows the enterprise to be always current with the latest features. This solution is also priced on a per seat basis.

Migrate Endpoints to Premises Based Core
This third alternative moves the session/call control to GENBAND’s EXPERiUS™ service. EXPERiUS ties its heritage to the Nortel MCS application server. Given the heritage the feature set will be familiar to CS1000 users. However EXPERiUS is very much a fully virtualized platform with a hardware freedom model where enterprises can select Dell, HP, or IBM servers. The enterprise would re-register UNIStim, IP or SIP phones to the on-premises EXPERiUS servers. Enterprises can then add UC, video and mobility applications.

GENBAND’s Intelligent Messaging Manager integrates with EXPERiUS for voice mail, including emulation of much of the Call Pilot’s telephone interface.

The Benefits
The benefits of the three alternative solutions are:

  • Limited or no user training except for new features
  • The option to select either CAPEX solution with on-premises or an OPEX solution via the cloud
  • Retaining the Nortel phones can save $200 to $500 per user
  • Migrating forward with a SIP-based solution
  • Deploying a full set of UC features
  • No SIP device licenses

Conclusions
The enterprise may select to rip and replace their IP PBX. However, the GENBAND solutions offer a lower impact path for the future. The financial expenses will be lower if the enterprise can continue using its existing CS1000 and UNIStim phone investment.

This is not to say that the GENBAND is the best solution. The enterprise should look at the ROI on both the GENBAND solutions and a rip and replace implementation. It may be that the enterprise is ready to replace the UNIStim phones and the CS1000 is at the end of its ROI life. The GENBAND solutions offer another benchmark for comparison.

Author: Eric Krapf at nojitter

Trends in UC and PBX

Unified communications market up 27% from a year ago; PBX market continues to take hits

—Market research firm Infonetics Research released its 1st quarter 2014 (1Q14) Enterprise Unified Communications and Voice Equipment report, which tracks PBX phone systems, voice over IP gateways, unified communications (UC) applications, and IP phones.

ENTERPRISE TELEPHONY AND UC MARKET HIGHLIGHTS

  • Worldwide PBX revenue (TDM, hybrid, and pure IP) is down 8% in 1Q14 from 1Q13, and down 8% from 4Q13
  • The unified communications (UC) segment is the lone bright spot, racking up a 27% worldwide revenue increase in 1Q14 from the same period a year ago
  • Although there are pockets of growth in parts of Europe and South America, along with strength down market, none of it is large enough to lift the overall PBX market
  • CALA (the Caribbean and Latin America) is the only region to notch positive year-over-year PBX revenue growth in 1Q14, as economic activity picked up in anticipation of the World Cup
  • Cisco, Avaya, and NEC are the PBX market share leaders; Mitel cracked the top 4 as a result of its merger with Aastra Microsoft, who leads the UC market, is the only vendor in the enterprise telephony segment to post year-over-year revenue growth in 1Q14

ANALYST NOTE
“The enterprise telephony market continues to struggle as businesses hold off new PBX purchases and invest instead in unified communications (UC) applications. Purchase cycles are getting longer, and competitive activity is putting pressure on the market with pricing all over the map,” notes Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research.

Will the Office Desk Phone Die?

Traditional PBX vendors hope not.   How about a “Hard MAC”?   Not the Apple product but the move, add or change.   Need one of those?

There was a time not long ago where most all of us drove into the office every day, sat at a desk and did our work.   And we spent a whole lot of time on the phone!   Fast forward to today and the trends are pretty easy to see that are impacting the use, and outright need, of a desk phone.   For example:

Usage:   15 years ago my office was my “command center”.  I held meetings there and … you got it… talked on the phone.   Phone calls, voice mail, and more phone calls.   Today we simply do not talk on the phone near as much.   Mainly because we have other ways to communicate that we didn’t have before:  IM/Chat; e-Mail; Video; soft phone and of course the cell phone.  All of these other types of communication are driving down the minutes of the Office Desk Phone.   Ask yourself – if my Office Desk Phone went away today could I still conduct business at least for a while?    The answer of is almost sure to be “yes”.

Mobility:  Most of us don’t like to sit in one spot all day.   You know the Herman Miller $600 chair?  You needed one of those because you didn’t move all day and you had to be right next to your Desk Phone – in case it rang.   Now you can be in the backyard, at a park or anywhere and make and receive business calls.   This is better for you and better for the customer trying to reach you.

Millennials:   The 15 – 30ish year olds have really only known an environment with wireless phones.   They may have grown up with a land-line but it had a base station and wireless handsets.   If you are one of the younger Millennials you have always had a cell phone.   And guess what … when they buy a house or get an apartment they don’t get a land line so when they move into the office environment they won’t need one there either.   As the older workers exit the workforce (the ones who like landlines) they will be replaced by new workers who don’t want or need one.
Chart
The youngest households are abandoning landlines in droves. About two-thirds of households led by people ages 15 to 29 relied only on cellphones in 2011, compared with 28% for the broader population.

Softphones:   Most all phone vendors now have a soft client… it can be on your laptop or it can ride on your iPhone or iPad.   You can use your company phone directory and network resources on devices other than the traditional Desk Phone.

For smartphone users making and receiving calls via hosted PBX apps, voice quality and service availability are improving dramatically as 4G data networks spread. Even business software suites such as Open Office, traditionally the realm of desktop or laptop computers, are now available in mobile versions.

Summary:

So the trend is clear…   like the landline at home, the Office Desk Phone is trending down quickly.   So who will end up keeping a standard Office Desk Phone… the people who like to talk on a standard Desk Phone.  It will be a personal preference.  They say they can hear better and it is more comfortable.   Other than personal preference there are too many other options to free up some space on your desk.