John Malone
John Malone is the President and CEO of The Eastern Management Group. He heads one of the world's premier communications...
Read Full Bio >>

John Malone | November 08, 2017 |


Hosted PBX Market Is a Whopping $20B

Hosted PBX Market Is a Whopping $20B Too big to ignore, at 54 million seats, billions in capital may pour in to the market during 2018.

Too big to ignore, at 54 million seats, billions in capital may pour in to the market during 2018.

Hosted PBX sales exceeded 18% of the total PBX market this year. But the real story, according to a new research report by Eastern Management Group, is the whopping total worldwide addressable market (TAM) for hosted PBX UC, also known as hosted UC and UCaaS.

At 54 million lines/seats, the worldwide addressable market for hosted PBX in 2018 is conservatively valued at $20 billion by the Eastern Management Group, as detailed in the report, "Worldwide Hosted PBX Market 2017-2022." But the revenue opportunity is even bigger yet when taking add-on UC applications like contact center and video into account, as well as factoring in pull-through services, such as systems integration and managed LAN.

In a four-year study, the Eastern Management Group examined hosted PBX and its place in the larger world of PBXs. That broader market, which includes traditional PBXs, IP PBXs, hosted and hybrid cloud systems, and server virtualization, feeds the TAM for hosted PBX. Eastern Management Group data collected this year from 3,500 IT managers around the world shows that enterprise, mid-market, and SMB shoppers all evaluate hosted alternatives when acquiring any business phone system. The type of system being replaced, whether from Avaya, Alcatel-Lucent Enterprise, Cisco, or any other vendor, is immaterial to buyers; they all explore hosted PBX options.

Businesses in North America are the largest purchasers of hosted PBX. But the U.S. accounts for about one-quarter of the TAM. Today we're seeing large hosted inroads in Western Europe and APAC. In fact, the five-year TAM for hosted PBX is larger in Western Europe and APAC than in the U.S.

10 Areas Where Hosted PBX Investments Are Likely to Go
The large TAM for hosted PBX will expand the sources of capital and ratchet up the total amount invested in the hosted PBX industry. We're already beginning to see this happen. We expect the money to go to these 10 areas:

  1. Expansion of the hosted PBX industry across Europe and APAC, with some emphasis on LATAM
  2. New UC collaboration services and managed services for enterprises
  3. Transition or expansion of established hosted companies into the mid-market as well as the enterprise market
  4. Network rollout by hosted companies
  5. Channel investments for partner training and direct salesforce growth
  6. Buildout of routes to market (there are more than 15 of them)
  7. Conversion of remaining premises PBX companies into hybrid premises-hosted providers
  8. M&A -- larger companies acquiring small players, as well as private equity investments across the board
  9. Hosted PBX buildout by thousands of tier 1, 2, and 3 service providers
  10. Venture capital for hosted PBX startups

What Money Can Buy
New money is going to attract more businesses with better technology. Cash will enable existing vendors that have struggled with a basket of customers averaging 10 to 15 seats to win over the mid-market and enterprise segments. More network operations centers deployed domestically and internationally will improve service uptime and support. Operations expansion will put resources nearer the customer, not oceans away. Investment dollars will buy self-serve software development, particularly at tier 1, 2, and 3 service providers.

Lastly, market expansion increases the enterprise value of existing hosted PBX companies as providers and investors pursue acquisitions.

This is the first in an eight-part biweekly series featuring research from Eastern Management Group's exhaustive "Worldwide Hosted PBX Market 2017-2022" report. For questions about the hosted PBX study please ask Eastern Management Group researchers.


October 24, 2018

With disparate workplaces and ever-expanding volumes of information to manage, the challenges for collaborating effectively are only intensifying. Many critical applications are not integrated, and

October 10, 2018

Businesses are growing across international borders quicker than ever, but scaling operations to follow suit can be a harder, longer process.

This webinar focuses on scaling your next-generat

September 26, 2018

Join Kevin Kieller, Microsoft UC&C expert, along with Ribbon Communications and Polycom, for an update on Microsoft Ignite, and a focus on critical things you need to know about your voice deployme

March 12, 2018
An effective E-911 implementation doesn't just happen; it takes a solid strategy. Tune in for tips from IT expert Irwin Lazar, of Nemertes Research.
March 9, 2018
IT consultant Steve Leaden lays out the whys and how-tos of getting the green light for your convergence strategy.
March 7, 2018
In advance of his speech tech tutorial at EC18, communications analyst Jon Arnold explores what voice means in a post-PBX world.
February 28, 2018
Voice engagement isn't about a simple phone call any longer, but rather a conversational experience that crosses from one channel to the next, as Daniel Hong, a VP and research director with Forrester....
February 16, 2018
What trends and technologies should you be up on for your contact center? Sheila McGee-Smith, Contact Center & Customer Experience track chair for Enterprise Connect 2018, gives us the lowdown.
February 9, 2018
Melanie Turek, VP of connected work research at Frost & Sullivan, walks us through key components -- and sticking points -- of customer-oriented digital transformation projects.
February 2, 2018
UC consultant Marty Parker has crunched lots of numbers evaluating UC options; tune in for what he's learned and tips for your own analysis.
January 26, 2018
Don't miss out on the fun! Organizer Alan Quayle shares details of his pre-Enterprise Connect hackathon, TADHack-mini '18, showcasing programmable communications.
December 20, 2017
Kevin Kieller, partner with enableUC, provides advice on how to move forward with your Skype for Business and Teams deployments.
December 20, 2017
Zeus Kerravala, principal analyst with ZK Research, shares his perspective on artificial intelligence and the future of team collaboration.
December 20, 2017
Delanda Coleman, Microsoft senior marketing manager, explains the Teams vision and shares use case examples.
November 30, 2017
With a ruling on the FCC's proposed order to dismantle the Open Internet Order expected this month, communications technology attorney Martha Buyer walks us through what's at stake.
October 23, 2017
Wondering which Office 365 collaboration tool to use when? Get quick pointers from CBT Nuggets instructor Simona Millham.
September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
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 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.