IP PBX: The Quiet Storm.(Industry Trend or Event)

Issue: Feb 14, 2001

By Bruce Sullivan, bsullivan@phillips.com

WASHINGTON - The telecom war has many fronts. While long distance battles, local exchange fights and wireless wars are raging, there is another communications brouhaha percolating just below the surface - the IP PBX upheaval - as companies transition from circuit-based to packet-switched internal phone systems.

It may not sound sexy, but it's expected to be a $40 billion market by 2005.

Although it may not be as glamorous as watching AT&T [T], WorldCom [WCOM] and Sprint [FON] cannibalize each others' long distance markets, or France Telecom [FTE] and Deutsche Telekom [DT] bid billions of francs and marks for wireless spectrum, the IP PBX pie eating contest may get pretty messy before it's all over.

The contestants are flexing their muscles this week here at VoiceCon 2001 in a hotel near the National Zoo, where the real Darwinian survivors reside.

And just like any other food chain, IP PBX players come in all sizes.

At the top of the pyramid, according to TEQConsult Group, sit Avaya [AV] and Nortel [NT] with about 25 percent each of the U.S. market. The second tier includes Siemens [SIEM], NEC and Mitel [MLT] with about 10 percent each, followed by Fujitsu, Ericsson [ERICY], Intecom and Hitachi at about 2 percent each. The fourth group of IP PBX market competitors with less than 1 percent of the market includes Cisco [CSCO], 3Com [COMS], Vertical Networks, Shoreline Communications, Alcatel [ALA] and several others.

Although IP PBX still is in its infancy, Avaya President and CEO Don Peterson said it is only a matter of time before it becomes the norm, at least for business customers.

"IP is not a question anymore. IP will be the core," Peterson said in his keynote speech at the conference.

The Bottom Line

Traditional PBXs, based on the 100-year-old Public Switched Telephone Network, are one of the anachronisms of the telecom revolution. IP PBX rollout has been hampered by a lack of standardization and skittishness on the part of customers who are investing lots of capital in still-evolving corporate phone systems.

COPYRIGHT 2001 Phillips Publishing International, Inc.

COPYRIGHT 2001 Gale Group