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Mandate for IP PBX Vendors: Barge Into Hosted UC

The 2018 hosted PBX market is raging. Hundreds of UCaaS providers control 18% of all PBX sales. But for a decade or more, cloud has benched the traditional IP PBX behemoths. Sidelined, they've been searching for a seemingly elusive, viable, hosted PBX go-to-market strategy. Not surprisingly the answer is in plain sight. Just study Mitel, one company that pretty much solved the riddle.

Eastern Management Group research analysts recently completed a four-year study of the hosted market and published the research in a new report, "Worldwide Hosted PBX Market 2017-2022." We present some of our go-to-market analysis in this post, the fifth in an ongoing series.

Mitel, a decades-old traditional PBX manufacturer, would seem an unlikely role model for its outsized competitors. Before hosted, Mitel's average premises PBX customer was an SMB. With an average switch size of 30 to 40 stations, Mitel was easily ignored by competitors with average sales of 80 to 100 stations. But just like the large premises PBX players, Mitel has always had a formidable complement of channel partners. Any one of Mitel's dealers might have sold PBXs for Alcatel-Lucent, Avaya, Cisco, NEC, or Unify, all large switch players that owned the PBX market long before the advent of hosted UC.

Can Premises PBX Channel Partners Sell Hosted UC?

Until Mitel helped to solve the channel partner riddle, no one would believe premises PBX dealers would capably sell hosted PBX. Mostly, that's still the case for the other guys. These are eight lingering antediluvian arguments:

  1. PBX partners don't know how to sell cloud or are afraid of it
  2. PBX partners will continue selling equipment, not UCaaS
  3. Partners must bifurcate the sales force (this office sells PBX equipment, that office sells cloud)
  4. Partners make more in commissions selling premises equipment than cloud
  5. Partners depend on one-time equipment commission checks, not annuities
  6. Vendors must do the selling for their partners, which may then fulfill the orders
  7. The partners just won't do it
  8. New born-in-cloud partners are needed

We know from our consulting practice that each of these theories lack merit. To wit:

  • Partners make more money selling cloud than equipment
  • Partners can and are being trained to sell cloud
  • Partners sell annuities like SIP trunks and maintenance today
  • Partners are successfully selling cloud and premises PBX even to the same customer

Mitel landed a workable go-to-market strategy for selling hosted PBX. How? By deciding that the existing premises PBX channel must sell hosted PBX. Period. The company didn't have sufficient money or time to reinvent the go-to-market wheel. Mitel not only succeeded using existing channel partners, it bought itself time. That's right, a lot of time. At some point, all premises PBX providers will realize the untapped value hidden in their channel partners. That's when the IP PBX companies can barge into the hosted UC market and occupy what probably should be their rightful place.

This is the fifth in an eight-part biweekly series based on research from Eastern Management Group's exhaustive "Worldwide Hosted PBX Market 2017-2022" report. See earlier posts:

For questions about the hosted PBX study please ask Eastern Management Group researchers.

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