My colleague Alaa Saayed has released a great market insight on the SMB market for premises-based IP telephony platforms. Interestingly, despite the hype around cloud computing--the oft-repeated belief that it is perhaps most appealing to the SMB market--premises-based systems actually represent the most popular method of delivering voice communications to SMBs.
Indeed, our research shows that the growth potential of the hosted market over the next five to six years is still low when compared to premises-based IP telephony solutions. Most SMBs want local control and prefer the one-time cost of a premises-based system, since the monthly charges associated with hosted services can be high. This is particularly true in the 50-to-100 extensions segment. While hosted telephony services have improved considerably in terms of voice quality and uptime, an on-site system is often less costly to maintain over a longer period of time and can exceed hosted services' uptime rates.
Public cloud-based communications offered through partnerships between PBX vendors and cloud providers (e.g. SEN + Amazon) will likely appeal to smaller organizations interested in cost savings, scalability, universal resource access and standardization. But there remains a lot of work to be done, especially around standards and compliance. And deploying IP telephony solutions into a true cloud computing environment poses implementation challenges, since real-time, mission-critical applications must share resources with other applications and negatively impact quality-of-service (QoS).
Open-source telephony also has disruptive potential, although some incumbent telephony vendors see open-source vendors as partners rather than threats, since open-source technology often drives innovation and leads to greater capabilities and features. Frost & Sullivan believes that open-source telephony is going to gain increasing traction among SMB customers, through both hosted services and premises-based solutions.
We see consumer telephony solutions as having only a minor impact on the SMB market, mostly in the SOHO space. These customers tend to base their buying decisions entirely on cost and are typically looking for a basic dial tone rather than advanced features. Skype and other free Internet telephony services are commonly used only for inexpensive long-distance calling and are frequently deployed alongside business-grade IP telephony solutions. Skype for SIP trunking promises to deliver tangible benefits to SMBs, but demand for this service is limited today.
Finally, the impact of UC platforms offered by non-telephony vendors such as Microsoft, IBM and others is certainly a potential threat to most of the incumbent PBX vendors. As new entrants seek to penetrate the business communications marketplace with solutions combining messaging, telephony, conferencing and collaboration capabilities, they will eventually be able to carve a niche for themselves in telephony by leveraging their favorable positions in related markets (e.g. messaging) and the cost-efficiency and convenience benefits of such all-in-one solutions. As technologies and business models mature and prices become more competitive, UC vendors will also be able to tap into the lower-end SMB market.
