Report: Business Market is Ripe for PBX Investments

There is a vast array of PBX solutions on the market today, and a new report from business intelligence company IBISWorld has given PBX phone systems a buyer power score of 4.4 out of 5.

The score means that conditions are highly favorable for businesses looking to purchase or upgrade a PBX system. The reasons for the favorability include dropping prices for PBX systems, a wide variety of choices, little product variation, low switching costs and low price variability.

“Thanks to these factors, the market is in prime condition for buyers to negotiate lower prices on PBX systems," said IBISWorld research analyst Andrew Krabeepetcharat.

There is some market concentration, the large amount of competition, particularly from foreign competitors, is driving down prices for PBX systems.

With a market of lots of competitors offering the same thing, the companies that charge the lowest prices for PBX systems are obviously going to win. With the advent of hosted PBX (which the IBISWorld report specifically excluded) systems made possible by the VoIP revolution, the PBX system can be happily located offshore and nobody could tell the difference between it and an on-premises PBX, except for the IT staff.

The fact that it’s relatively easy to switch to different providers means that companies will have to provide the best features and services for the lowest price to stay competitive. The existence of hosted and open source projects such as Asterisk will make the market even more competitive.

These price wars have led to lower margins becoming a fact of life for PBX providers, which has caused a lot of mergers and acquisitions in the industry as providers try to stay afloat. This will likely lead to more market concentration in the future, which may eliminate the buyer power that PBX customers currently hold over providers.

IBISWorld, still expects prices to keep dropping through 2017 with low price volatility.

Edited by Alisen Downey