40% of hosted PBX customers expect to add 5% to 10% more seats in 2019.
2018 Hosted PBX Sales Hit $5 Billion: Another Good Year
The hosted PBX industry finished 2018 with the most robust sales performance in history and new revenues of $5 billion worldwide. Year-over-year growth in purchases was 6%, according to a new Eastern Management Group study.
Hybrid PBX shipments, also reported by Eastern Management Group, grew 15% in 2018. Hybrid systems combine cloud functionality with a PBX infrastructure.
According to the research company’s analysts who studied data from 3,000 customers, three primary reasons account for the 2018 hosted PBX sales growth. First, older premises PBXs -- both traditional and IP PBXs -- are being replaced at the rate of 14% annually. Second, many old premises systems are breaking down. Third, companies are opening branch offices and serving them with hosted PBXs and SIP trunks linked to an existing premises PBX. New offices are getting the functionality of unified communications without necessitating the replacement of a premises PBX at the headquarters.
Several minor factors are also fostering the growth of hosted PBX sales. Here are a few: Many telcos are honing their hosted PBX sales and channel skills. Mobile network operators (MNO) are offering one- and two-seat licenses to small office/home office (SOHO) customers. Cable companies -- of which there are many thousand -- can sell hosted PBX by building on existing infrastructure and operations. And cloud distribution channels are increasing horsepower as vendors “borrow” best practices from peer groups.
Hosted PBX closed out 2018 accounting for 18% of all new PBX sales. The performance grew from a meager 4% of all PBX shipments in 2010. While hosted PBX growth is slowing, sales should be robust at least until 2025, the final year of the new Eastern Management Group forecast models.
In 2018, the U.S. accounted for almost two-thirds of hosted PBX shipments. Businesses with between 11 and 50 employees accounted for the most significant percentage of 2018 hosted PBX sales. This small business segment is expected to remain dominant through 2025, although the average sale size may get smaller should SOHO sales grow substantially -- which Eastern Management Group analysts see as both a possibility and an emerging market opportunity for mobile operators.
Customers are bullish about their continuing use of hosted PBX. Churn, which is turnover of hosted licenses, is low for these customers in general, and practically nonexistent for enterprises (see related No Jitter article). Customer projections for continued acquisition of hosted PBX seats are similarly promising. Through its interviews with 3,000 IT managers, Eastern Management Group found that 40% plan to add between 5% and 10% more hosted PBX seats in 2019.
Hosted PBX Market: Far from Saturated
The hosted market is anything but saturated. Eastern Management Group analysts assess total worldwide revenue for hosted PBX already at more than $20 billion and growing (see related No Jitter article). Sustained growth of seat licenses is but one driver. To this Eastern Management Group analysts add imminent telco sales, mobile operator sales, cable company sales, traditional and IP PBX premises PBX vendor cloud sales, new suppliers, and dealers. It is a very long list that ought to get longer.