Surviving the IP PBX decline – where do the opportunities lie?

In 2006, the IP PBX market was buoyant; a trend-setter that seemed to be growing at predicted rates of 80 percent and upwards.  Enter the global recession and three years down the line the market seems to be, like all its industry peers, feeling the economic chill.

According to research house MZA’s latest Global PBX/IP PBX market report the first quarter of 2009 took a proverbial nose dive.  Worldwide sales of PBX and IP PBX extensions declined by 30 per cent in this period compared to the same period in 2008. The above applies to all regions and markets including South Africa.

The exception(s)

Chris Wortt, VoIP Sales Manager at Polycom in Europe, Middle East & Africa (EMEA) says, “Fortunately, there is also a silver lining.  It would seem those vendors that have been playing in the service provider space – such as MTN and Telkom – have been impacted to a lesser extent than large telecommunications service and infrastructure providers.  For example, organisations such as Polycom have been experiencing success in the system integrator and service provider spaces.”

While this by no means implicates that these organisations have not been affected, it does serve as some indication that the service provider marketplace does seem to offer opportunities, all things considering.

Additionally the strength and acceptance of Open Source PBX and telephony platforms such as Asterisk and Open SIP enabled it to be competitive differentiators in a cash-strapped marketplace, particularly in the 50 seat and below user segment of the market.

Wortt notes, “However, the 50 seat market does pose its own unique challenges and is a highly competitive market.”

“Furthermore, considering that the leading IP PBX players have developed enterprise-centric offerings and resulting go-to-market strategies, it does require a mind shift of sorts.”

The SA SME landscape

In South Africa, the 50-seat and below segment technically falls in the small to medium enterprises (SMEs) space.  It is a growing market that according to the country’s annual SME Survey 2009 continues to cope with the recession. Principal researcher Arthur Goldstuck says, “SMEs are holding up incredibly well in the face of the recession. Make no mistake, they are bowed, but they are not broken.”

So where does the above leave serious IP PBX players and their partners?

For one, products must be tailored to meet less-seat demands therefore meeting SME demand.  Additionally, open source should remain the platform of choice – both Asterisk and Open SIP are bona fide enablers.  Lastly, and importantly, reaching the service provider marketplace.

Adds Fiona Mclean-Banks, Polycom Business Development Manager at distributor Zycko, “In South Africa there are a number of service providers that are currently looking at ways to expand their portfolio and IP PBX has become a viable addition.  And interestingly, these service providers also reach the abovementioned 50 seat and below market.”

A case for SME IP PBX

“Service providers are well-established, trusted brands in South Africa. They are the logical choice particularly for SMEs that need their requirements to be met effectively without the hassle of months of research and support issues afterwards.”

It is also these SMEs that have moved away from dial-up and are using ADSL.

“ADSL had grown from 3% to 63% penetration of SMEs using the Internet in the period between 2003-2008, while dial-up dropped from 62% to 9.5% by last year. This year’s research shows that dialup has halved again to 4%,” says Goldstuck.

Thus, the logical assumption would be that these businesses are already using established service providers to obtain ADSL connectivity.  The next step is therefore to extend service provider offerings by providing services such as IP PBX that offer tremendous savings and allow these organisations to gain the most from their investment in ADSL.

Adds Fiona Mclean-Banks, Polycom Business Development Manager at distributor Zycko, “The advantages are numerous to the entire channel and its end users, it is healthy knock-on effect that sees everyone benefiting be it in providing more bandwidth, supplying products or saving on calls and pricey video conferencing.”

“Some more good news is that the very nature of the SA marketplace has enabled us to leapfrog technology development.  We have had the benefit of learning from our European and US counterparts, steering clear of the obstacles to adopt the best possible IP PBX solutions.”

“Also, our SME marketplace is not faced with legacy issues and integration challenges.  The install pain point is therefore less.”

Furthermore, with the evident advances South Africa is making in terms of infrastructure upgrades, driven by the 2010 World Cup, there is undoubtedly a heightened sense of awareness and businesses now seem to be more open to accepting newer, proven technologies.

Wortt concludes, “So what is the bottom line message? Partner with the country’s service providers and provide them with a strong IP PBX solution that will enable them to reach the SME marketplace and allow the entire channel to insulate itself against the economic chill.”