When it comes to hardware phone systems, many enterprises are of the "if it's not broken, don't fix it" mindset -- as reflected by a struggling PBX market in 2012.
Challenging economic conditions somewhat explain the weak enterprise telephony market, said Diane Myers, principal analyst for VoIP, UC, and IMS at Campbell, Calif.-based Infonetics Research. Legacy telephone equipment also has long lives, she noted in a new quarterly market research report on enterprise UC, VoIP, and TDM equipment.
"Quarterly, year-over-year declines continue as businesses push out spending where existing telephony solutions still get the job done," Myers said. "There is a lot of economic uncertainly, and enterprises are absolutely waiting and not readily upgrading. If equipment still works, it's hard [for enterprises] to make an investment when they are faced with other priorities."
Will softphones be the death of the hardware PBX market?
Hardware PBX phone systems aren't the only telephony category that has fallen on tough times. Softphone sales are also feeling the pinch as enterprises hold onto legacy equipment. "Softphones are selling, but we aren't seeing enterprises making huge transitions to soft clients and doing away with hardware on the desktop. Enterprises still need a PBX or system to manage call control, voicemail and caller ID features for softphones," Myers said.
The YMCA of Tacoma Pierce County, Wash., has been in the process of a hardware PBX upgrade across 10 sites since last year, following the opening of a new location. The YMCA's legacy Nortel equipment was almost 8 years old, and IT was concerned about the availability of replacement parts due to the vendor's looming bankruptcy at the time, said Andrew Homan, the YMCA's network administrator. "We decided it was time to jump off and look for something else," he said. "When we selected ShoreTel for the new site, it was the kickoff for the rest of the locations."
The YMCA currently has between 450 and 500 IP phones across nine of its 10 locations. Softphone capabilities were not a driver for the phone system upgrade, but Homan and his team are enjoying the systems' signal interface for managing phones, regardless of their location.
Despite being a hardware-based system, users are not tethered to their desks. "One of our goals with the new IP phones was to be able to relocate them within a branch easier than our old phones. It's given users the ability to move around the building or to another site by checking into any phone with their phone number, without needing to involve IT," he said.
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Enterprises experiencing enough growth to justify an upgrade, and those moving or opening another site are two of the most popular candidates for an investment in a new phone system, said Karen Kervin, senior research analyst at Mokena, Ill.-based Nemertes Research Group Inc.
UC applications that users can't get with a traditional hardware phone -- like mobility and softphone capabilities that require IP -- might also justify an upgrade, Kervin said. And despite a sliding telephony market, UC sales have kept strong every quarter of 2012, Infonetics' Myers noted.
"Users are looking for integration with all of their UC applications, but it needs to be an IP system or even a cloud-based offering in order to do that," Kervin said. "If enterprises have a cost-justifiable need for UC applications in their opinion, it might compel them to look for a phone system or cloud-based offering that could support UC."
PBX market: Is it all downhill from here?
It's not all bad news for the 2012 PBX market. The fiscal third quarter of 2012 identified a slight, 2.8% quarter-on-quarter uptick in global enterprise spending in the PBX market -- which included TDM, hybrid, and pure IP PBXs. Despite the incline however, sales are still down 5.6% from 2011's fiscal third quarter, the Infonetics report noted.
Most enterprises are under the impression that hanging onto hardware is a money saver, but maintenance costs can creep up on old equipment, especially as parts become hard to find, Nemertes' Kervin said. "Enterprises may actually be able to justify the purchase of a new phone system through some of the new UC and mobile features they support today," she said.
While some businesses could see productivity gains with a new UC-enabled phone system, those gains are hard to quantify because of the bring-your-own-device trend, Infonetics' Myers said. "Users might be demanding UC tools, but many people are bringing in their devices to the workplace," she said. "Tablets and smartphones have eclipsed the PC and deskphone for UC, and that just goes to show more businesses have to be able to address these mobility needs."