During the 1990s, the collective market shares of American system suppliers, with AT&T/Lucent Technologies the only very strong domestically-based player, held relatively steady. Shipments were sufficient to retain a several-point lead over Canada’s Nortel and Mitel at the start of 21st century.
It was during the late 1990s, however, that seeds were being planted for American-based suppliers to recapture a good percentage of lost market share experienced over a 30-year period.
In late 1998, Cisco made headline news when it acquired Selsius Systems from Intecom. There were also several domestic start-ups, several hoping to leverage desktop CTI technology, which had the potential to contribute to the turnaround. These suppliers included NBX (acquired by 3Com in 1999), ShoreTel (originally known as Shoreline Teleworks), Vertical Networks, Artisoft (who merged with Vertical Networks to form Vertical Communications), and Altigen. Interactive Intelligence, another 1990s startup, began as an ACD systems supplier, but has since entered the IP-PBX market with its Vonexus IEC solution. Sphere Communications was another late 1990s startup, but they were acquired by NEC last year.
In the last few years, another group of American system suppliers has emerged in the market, those repackaging and selling IP telephony systems based on open source software. The most prominent open source solution is Asterisk from Digium (which also markets its own system offering, Switchvox, itself a product that came from a startup which was acquired by Digium)
Today the domestic market for PBX systems is once again dominated by American system suppliers, or more accurately two American system suppliers. Cisco and Avaya collectively account for 57% of current line station shipments; they are easily the two strongest domestic competitors. It goes without saying that Cisco’s decision to expand into the voice communications market has been a game changer.
Another prominent competitor from California is Siemens Enterprise Communications, who I now classify as an American supplier since Los Angeles-based Gores Group recently acquired a 51% stake from Siemens AG (which is gradually divesting its communications businesses after more than 160 years in the industry). It now remains to be seen if Gores Group can help Siemens Enterprise Communications return to its Rolm glory days.
Cisco, Avaya, Siemens, and the other American system suppliers now have a collective 64% share of the market, the highest level since the mid-1980s.
During the first nine years of this decade, Canadian suppliers have lost a few market share points despite Aastra’s acquisitions of European-owned Intecom and Ericsson, and Mitel’s purchase of U.S.-based Inter-Tel. Mitel’s and Aastra’s recent gains have been offset by Nortel’s declining PBX system shipments the past three years in the U.S. Since the beginning of this decade Nortel has lost about one third of its U.S. market share. The table below shows the history of the Canadian supplier picture.
European and Japanese suppliers have declined even more. Alcatel-Lucent, the sole European entry left standing, has a U.S. market share slightly under 1% and NEC, the only current Japanese supplier of enterprise PBXs, has dipped below 5% share in the U.S. The two tables below show the changing picture for European and Japanese leaders.
The comeback by American-owned PBX system suppliers will likely receive another boost in the next few years, because Microsoft is now gingerly feeling its way into the voice communications market with its evolving OCS 2007 solution. In a few years, Microsoft hopes to challenge today’s market leaders on an equal footing. Should Microsoft succeed in its mission, and there are those like myself who can’t dismiss this possibility, the collective domestic market share of American-owned system suppliers may someday return to the old AT&T monopoly levels of 90%. Microsoft has the resources and capabilities to emulate Cisco’s market success. The recent OCS 2007 Release 2 announcement at VoiceCon Amsterdam demonstrates Microsoft’s commitment to the voice communications market and its intention to be a global market leader in the future federated telephony/UC server market.
It appears that after reaching a nadir in the mid-1990s, American-owned suppliers have again established themselves as forces to be reckoned with in the enterprise voice communications market both domestically and globally.
Allan Sulkin, founder and president of TEQConsult Group, is also known as the Guru of PBXs. He is celebrating 30 years working in the telecommunications industry, has been a longtime contributor to Business Communications Review/nojitter.com, and helped found PBX in the 90s, the ancient ancestor of VoiceCon.
