Unified Communications Featured Article

The PBX Market Can't Stand Against UC Sales

By Steve Anderson
Contributing TMCnet Writer

Technology has a way of replacing itself. When the automobile started coming out, it replaced the horse-drawn carriage for many. The microwave oven also replaced regular stove tops for more than a few people. Hundreds of examples of new technology displacing old technology are abound throughout our history, and now, there's one more. A new report from Infonetics Research shows us that sales of unified communications (UC) systems are utterly ruining the market for private branch exchange (PBX (News - Alert)) goods.

The Infonetics Research report noted two critical points: The UC sales market had a pretty impressive first quarter of 2014, seeing a 27 percent jump in sales as compared to the same time just last year and the market for PBX—which includes items ranging from UC applications and IP phones to time-division multiplexer (TDM) systems--had a bit of a collapse, dropping eight percent compared not only to the same time in 2013, but also eight percent compared to the fourth quarter of 2013.

Perhaps unexpectedly, the UC market has a clear leader whose growth stands out from its competitors, even in a market that's actively growing: Microsoft (News - Alert). Microsoft was the only vendor to post growth in a year-over-year comparison in the entirety of the UC market as of the first calendar quarter of 2014.

The takeaway from this, meanwhile, was starkly clear to Diane Myers, Infonetics Research (News - Alert) principal analyst, who noted that the market's move to UC was quite clear as expressed by the numbers. Myers elaborated by saying, “The enterprise telephony market continues to struggle as businesses hold off new PBX purchases and invest instead in unified communications (UC) applications."

That combination means major things ahead for the firms involved in both sectors. Currently, Infonetics Research reportedly expects the voice over Internet protocol (VoIP) and UC services markets to reach $88 billion worldwide as early as 2018, while the PBX market will likely continue to shrink. That's bad news for the field's top firms, including Avaya, Cisco (News - Alert), and NEC, as well as newcomer Mitel, fresh off its merger with Aastra.

The pace of technology is rapid, and inevitably, it brings change. It's a development that's going to hit the market frontrunners especially hard, though firms like Avaya, Cisco and NEC (News - Alert) will likely be able to recoup the loss of that market elsewhere since these firms have a fairly diverse offering slate. It's worth wondering, in fact, if these firms aren't actually working on a way to get a better presence in the UC market, especially given its growth potential over just the next five years. Said firms likely have the capital to pull off such sea changes, and it's worth considering that, perhaps, these firms are trying to get the last out of the PBX market before making the jump. Some reports suggest that Avaya is already making a push on the UC market. Otherwise, these firms may be at a significant competitive disadvantage as more firms go to UC and leave the PBX market largely shut out. However, the growth of virtual PBX is worth noting here as well, so there could be some comparatively lateral moves afoot.