SHARE



ABOUT THE AUTHOR


Melanie Turek
Melanie Turek is Vice President, Research at Frost & Sullivan. She is a renowned expert in unified communications, collaboration, social...
Read Full Bio >>
SHARE



Melanie Turek | December 21, 2010 |

 
   

Threats to the SMB Premises-Based IP Telephony Market

Threats to the SMB Premises-Based IP Telephony Market The growth potential of the hosted market over the next five to six years is still low when compared to premises-based IP telephony solutions.

The growth potential of the hosted market over the next five to six years is still low when compared to premises-based IP telephony solutions.

My colleague Alaa Saayed has released a great market insight on the SMB market for premises-based IP telephony platforms. Interestingly, despite the hype around cloud computing--the oft-repeated belief that it is perhaps most appealing to the SMB market--premises-based systems actually represent the most popular method of delivering voice communications to SMBs.

Indeed, our research shows that the growth potential of the hosted market over the next five to six years is still low when compared to premises-based IP telephony solutions. Most SMBs want local control and prefer the one-time cost of a premises-based system, since the monthly charges associated with hosted services can be high. This is particularly true in the 50-to-100 extensions segment. While hosted telephony services have improved considerably in terms of voice quality and uptime, an on-site system is often less costly to maintain over a longer period of time and can exceed hosted services' uptime rates.

Public cloud-based communications offered through partnerships between PBX vendors and cloud providers (e.g. SEN + Amazon) will likely appeal to smaller organizations interested in cost savings, scalability, universal resource access and standardization. But there remains a lot of work to be done, especially around standards and compliance. And deploying IP telephony solutions into a true cloud computing environment poses implementation challenges, since real-time, mission-critical applications must share resources with other applications and negatively impact quality-of-service (QoS).

Open-source telephony also has disruptive potential, although some incumbent telephony vendors see open-source vendors as partners rather than threats, since open-source technology often drives innovation and leads to greater capabilities and features. Frost & Sullivan believes that open-source telephony is going to gain increasing traction among SMB customers, through both hosted services and premises-based solutions.

We see consumer telephony solutions as having only a minor impact on the SMB market, mostly in the SOHO space. These customers tend to base their buying decisions entirely on cost and are typically looking for a basic dial tone rather than advanced features. Skype and other free Internet telephony services are commonly used only for inexpensive long-distance calling and are frequently deployed alongside business-grade IP telephony solutions. Skype for SIP trunking promises to deliver tangible benefits to SMBs, but demand for this service is limited today.

Finally, the impact of UC platforms offered by non-telephony vendors such as Microsoft, IBM and others is certainly a potential threat to most of the incumbent PBX vendors. As new entrants seek to penetrate the business communications marketplace with solutions combining messaging, telephony, conferencing and collaboration capabilities, they will eventually be able to carve a niche for themselves in telephony by leveraging their favorable positions in related markets (e.g. messaging) and the cost-efficiency and convenience benefits of such all-in-one solutions. As technologies and business models mature and prices become more competitive, UC vendors will also be able to tap into the lower-end SMB market.





COMMENTS



Enterprise Connect Orlando 2017
March 27-30 | Orlando, FL
Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Special Offer - Save $200 Off Advance Rates

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

March 8, 2017

Enterprise IT's ability to innovate is critical to the success of the business -- 80% of CIOs agree. But the CIO role has never been more challenging than it is today, with rising operational respo

February 22, 2017

Sick of video call technology that make participants look like they're in the witness protection program? Turns out youre not alone. Poor-quality video solutions can give users an unprofessional ap

February 7, 2017

Securing voice communications used to be very simple since it was generally a closed system. However, with unified communications (UC) you no longer have the walled protection offered by a dedicate

February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.