SA - PBX, IP Telephony Showdown

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Story Filed: Friday, December 14, 2001 4:20 PM EST

Johannesburg, Dec 14, 2001 (ITWeb/All Africa Global Media via COMTEX) -- The PBX market has had its ups and downs over the last couple of years.

End-users appear to be adopting a wait and see attitude to evaluate the viability of IP telephony, after making substantial Y2K upgrades over the past couple of years.

A recent BMI-TechKnowledge PBX Market report states that in 1999 overall sales dropped rapidly due to the Y2K issue. Sales of smaller digital PBXs prevailed, however, as customers upgraded their legacy analogue systems to prepare for Y2K.

Sales in digital PBXs remained strong in 2000 and 2001 while the overall size of the South African market for PBX equipment and other corporate voice switching technologies was R1.28 billion in 2000, excluding exports and sales into call centres.

"After many years of stability, the PBX market has entered a period of uncertainty," says Heinie Booysen, analyst at BMI-TechKnowledge.

"The emergence of voice over IP (VOIP) has created the potential for an industry-wide transition from traditional circuit-switched PBXs to server-based systems over an IP infrastructure. Although IP-based PBX uptake in SA is far from being significant yet, many users have slowed investments in their existing PBX networks as they evaluate the advantages of buying VOIP systems and wait for possible deregulation and cheaper bandwidth. Users are concerned that current IP-PBX systems may not yet deliver the features, scalability and reliability they have come to expect in traditional PBXs. At the same time, they are reluctant to make a large investment in a traditional PBX that may not provide the functionality that they need a few years from now," explains Booysen.

VOIP vs PABX

The emergence of VOIP systems has raised this question: Will VOIP systems displace the PBX-installed base or will the PBX be able to evolve with VOIP? Cisco International argues that VOIP is an all-or-nothing proposition - the PBX is dead and VOIP systems are the future. Vendors such as Avaya, Nortel, Siemens, Mitel and NEC do not agree. These companies suggest that PBXs can easily support VOIP with IP line and trunk cards, IP phones, and PC soft phones. These IP add-ons will allow larger organisations the option of phasing into IP telephony, by equipping their conventional PBX systems with IP functionality.

Full-scale IP-PBXs will compete for a share of new system shipments, as the installed base of legacy systems begins to age. PBX manufacturers argue that the PBX allows customers to implement VOIP whenever the application warrants. Thus far, users are experimenting with small VOIP systems remote locations but are reluctant to replace a mid-size to large PBX.

Booysen also states that a surprise in 2000 was that sales of analogue PBXs still generated significant revenues in spite of the negative market sentiment towards analogue systems. It is, however, a certainty that this market is on a declining trend. There was healthy growth in revenues in high-end digital PBXs in 2000. Although the growth in unit sales did not increase dramatically, more high-end systems were sold in 2000 than in 1999, which led to a large increase in revenue due to the higher cost of high-end systems.

"Digital PBXs will continue to erode the analogue base, with this trend having been accelerated by the Y2K issue and by the prominent vendors' introduction of digital versions of analogue products in 2000. The growth in the CBX market (LAN, IP, PC, Server PBXs) was smaller than expected.

This market will see slower growth than anticipated due to bandwidth limitations in South Africa and regulatory issues surrounding IP telephony.

However, BMI-TechKnowledge research shows that significant growth in the CBX market is expected in 2004/2005 post deregulation and when the second network operator has become a significant player," concludes Booysen.

Northern Light

-- Anonymous, December 20, 2001


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