SHARE



ABOUT THE AUTHOR


John Malone
SHARE



John Malone | January 28, 2009 |

 
   

Open Source PBX is 18% of North America Market

Open Source PBX is 18% of North America Market In just-completed research, the Eastern Management Group finds that open source represents a much larger segment of the market than many people might have thought.

In just-completed research, the Eastern Management Group finds that open source represents a much larger segment of the market than many people might have thought.

Sales of traditional PBXs and key systems have moderated in recent years. Experts attribute this to a variety of factors. Companies, they report, are just keeping their phone systems longer. The wave of Y2K replacements that flooded the market, now almost a decade later, are still in working order. Demand is affected by the economy; enough said. True, these are relevant considerations, but they largely miss the point.

Digium, Polycom, Aastra, Sangoma as well as other vendors inside the Open Source PBX business see what’s occurring from a different vantage point, and arguably would dispute the experts. And they would be largely correct. A market shift is underway, and has been since Open Source PBXs arrived.

As Asterisk and other Open Source projects evolved, users have multiplied from geeks only, to early adopters, to the mainstream. That’s mainstream and not backwater creek. And we are not just at a tipping point, we are well beyond that. Traditional telephone system manufacturers are now, largely unknowingly, competing for a bigger share of a shrinking market. And growing sales may be increasingly difficult for the largest names in the telephone business unless each takes share from the other. Granted, some traditional companies must see this happening, which may account for Nortel’s acquisition of Pingtel and the new Nortel Software Communication System 500. But that is not yet the norm.

Because Open Source PBXs came into being like a garage band, they were somewhere between discounted and booed by most everyone. That was the early days.

WHY IS THERE SUCH GROWING COMMITMENT TO OPEN SOURCE PBXs?

But here’s what recently got my attention. Last year I witnessed three companies, for each of which I’ve been on the board of directors, replacing their traditional PBX with an Open Source PBX. Two were moving, and the other wanted a pure IP solution, not TDM and not converged. The bottom line to me was that if all three transitioned to an Open Source PBX system, and were pleased with the outcome as each was, this must be a larger market than people give it credit for.

Why did they each choose Open Source? Not because I told them to, because I didn’t. And not because they are all technology companies, because each is in the far reaches of technology and has no stake in Open Source. Each made the switch to Open Source because, they said, it proved to be equal in quality to the best traditional telephone system and it was cheaper. Not just a little cheaper, a lot cheaper. So cheap that no traditional PBX or key system approaches the cost of an Open Source PBX. Open Source PBXs are typically 40% or more below the cost of a conventional telephone system

Their decisions got my attention, because cost has been the single biggest phone system decision influencer since the 1968 Carterfone decision. Cost changes everything. Competition, and the importance of cost as the buyers’ key decision variable is mostly why PBX prices have and continue to drop 5-10 percent annually. And if nothing can touch the cost of an Open Source PBX, there’s a big market people have just not been counting.

Since The Eastern Management Group, as a research company, has been tracking traditional PBX and key system shipments for 30 years through its Quarterly Monitor Reports, we wanted to be the first to size the market for Open Source (OS) PBXs, and we had the tools to do it.

Our biggest questions were the most obvious. How much of the total PBX and key system market is accounted for by OS PBXs? Are all OS PBXs small (some say it’s all fewer than 30 end points) or are systems being installed to more than 100 end points, or 500? Do average businesses, say in Banking, Education, Government, and Health Care use Open Source PBXs, or are all the buyers merely technology companies who can self install? And would anyone buy a second one?

Sizing the real commercial market for OS PBXs has historically not been done simply because it’s difficult. Open Source is free software. People download it at whim on occasion, just to muck around with. A lot of it makes its way into laboratories. Techies put it in their homes just because they can. Others download multiple copies, to get the latest version, never turning one into a phone system for their business. These are among the non-commercial implementations and have to be subtracted from the total number of downloads of Open Source software available on the Internet. We too had to address all that in sizing the market for business OS PBXs.

To do so we began by performing three discrete studies, totaling more than 7,000 surveys.

The first survey had two phases, the initial being a test/control group of No Jitter readers. Several hundred surveys were completed, allowing us to evaluate the survey questions and responses. In the second phase, we conducted surveys of 6,734 IT executives chosen from a proprietary database of more than 80,000 individuals.

The second survey consisted of telephone interviews with 51 dominant vendors in the Open Source PBX business. The third survey was a telephone survey of 100 VARs.

All survey data was incorporated into market models The Eastern Management Group has built over several decades to track and forecast the size of the PBX and key system market, for our report services.





COMMENTS



July 12, 2017

Enterprises have been migrating Unified Communications & Collaboration applications to datacenters - private clouds - for the past few years. With this move comes the opportunity to leverage da

May 31, 2017

In the days of old, people in suits used to meet at a boardroom table to update each other on their work. Including a remote colleague meant setting a conference phone on the table for in-person pa

April 19, 2017

Now more than ever, enterprise contact centers have a unique opportunity to lead the way towards complete, digital transformation. Moving your contact center to the cloud is a starting point, quick

July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
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.