Is the PBX Dead?

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Is the PBX Dead?

"Global enterprise PBX revenue fell 6 percent in the first quarter of 2015 (1Q15) from a year ago, according to the IHSInfoneticsEnterprise Unified Communications and Voice Equipment report from IHS," according to IHS press.

Worldwide PBX revenue (TDM, hybrid and pure IP) totaled $1.6 billion in 1Q15. And PBX line shipments were up 3% in 1Q15 from 1Q14. Yet there is a headline of SMB: Is the PBX Dead? Most businesses in the world are small business (not really defined by the SBA, but I consider up to 250 employees, while others say up to 500 employees is SMB).

In the article, the question is why would a small business (under 25 employees) use cloud instead of premise. The math goes like this:

"The 20-station model for $600 monthly cost is $7,200 yearly. Most gear can assume a seven-year life, and I didn't add UPS, power protection or managed switches in either configuration. A 20-station IP-PBX at street price is $9,400, the factory extended warranty is $300, and that dealer package is $1,200 per year."

I would argue that legacy PBX running on proprietary gear lasted 7 years, but that most appliances are utilizing mass market components from the consumer PC industry which won't last 5 years.

"The hosted model is $50,400 over seven years, and the premises-based IP-PBX is $18,100. In less than two years, the cost of owning your own gear outweighs the hosted model. Throwing in the cost of SIP trunks for $60 monthly doesn't change the results, and neither does adding in the cost of a single POTS line for failover."

Straight up replacement for 20 seats is likely to be cheaper to go with the premise PBX IF you don't need enterprise level features and support. Conferencing, collaboration, software integration, presence, mobile apps and softphones on one platform are the benefits that defy calculations. You can piecemeal this together on the cheap, but it is the one, standard comms platform that allows a business to be flexible and productive. (the training, support and maintenance doesn't hurt either.)

Some premise gear is catching up to enterprise - like 3CX and FreePBX. However, you pay for maintenance and licensing on those platforms. 3CX runs on a standard Windows server. You think that will last 7 years? It will run out of patches. Plus who is securing a box running on Windows, an operating system that literally has an update every single day!

Are efax, voicemail to email, simul ring and SMS available on premise PBX gear?

The truth is on a sale about a straight replacement - PBX for key system - yeah, go with premise. And give them this phone:

Thumbnail image for bell-phone.jpg

If you don't want a cloud phone system, you likely don't want to change the way your business does business either.

And you are likely selling the same way you did in 1999. Good luck with that.

People want the latest cellphone - a mini-computer in their pocket. But because of the way phone systems are sold (and by whom), the mobile phone is a better communications tool than the desk phone. It doesn't have to be that way any more.

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