Thursday, July 19, 2007

The 10,000 Foot View of the Global PBX market

This month we look the battle of core technologies. In 1990, as in 1980, there was one way to do telecom: TDM. Today we have three major options: TDM, VOIP, or a hybrid of both. Over the decade, Hybrid has emerged as the predominant choice, outselling pure IP systems by about two to one (or more). We see that IP has a stronger growth rate, which we might in part ascribe to having a smaller base. $100 million in sales in the pure IP market provides 9% growth, but $100 million in Hybrid works out to being just 2% growth. Growth is decelerating in the pure IP market, as we would (at least mathematically) expect it would. If we look at the market shares of the three technology models, it would seem that the migration path most companies took was from TDM to Hybrid, which makes sense given that Hybrid offers up some carry over of what an enterprise owns and may require no, or less, re-wiring.

On the other hand we see that pure IP is very strong in the “Greenfield” market, where we have an entirely new enterprise or an entirely new site. But as we the leveling off of pure IP growth, the question becomes whether or not both will converge to the median growth rate of about 11%. If IP continues to out-pace Hybrid, then we will begin to see erosion of Hybrid's share (as TDM migration winds down, and all new growth would become more and more a zero sum game between the two remaining technologies). Most analysts expect both technologies to be growing about the same pace by the early part of the next decade, and for Hybrid to level off at about 60% of market, and IP at 40%.

My thanks to Dell O'ro and the Yankee Group for their excellent research.

Douglas Green
Publisher, Telecom Reseller