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August 07, 2007

NEC Stepping into the Software IP PBX Space with Sphere Acquisition

By Erik Linask, Group Managing Editor

If you’re wondering why things seem to have been somewhat quiet over in Lincolnshire, Illinois, it’s because the folks at Sphere Communications (News - Alert) — who are normally busy enhancing their software IP PBX (News - Alert) — have been quietly working out the details of a $42 million deal that will make Sphere part of NEC Corporation.
In the North American PBX space, NEC (News - Alert) has long been a strong player — but consistently failing to crack the top three. In fact, its product line remains strong, its market presence has not followed suit.
Certainly, bringing on Sphere, and its IP PBX expertise can only serve to strengthen NEC’s market presence. The question, though, is how will the software-based product line from Sphere be integrated into the NEC hardware-based solution set?
Certainly, Sphere’s expertise in application development could be a tremendous asset, complementing NEC’s IP-based telephony systems with next generation Web-based features and applications. Of course, providing applications support to NEC’s IP PBX products would mean a deviation from Sphere’s existing product strategy. 
On the other hand, given the growing focus on software solutions, the Sphericall software-based solution might provide NEC with a new market strategy. The software approach enables customers to not only minimize the cost of migration, but also lowers the cost and effort of ongoing maintenance — both of which are key in today’s age of cost cutting.
Either way, the amalgamation of Sphere and NEC certainly provides instant growth for NEC, particularly in North America, where Sphere boasts a strong network of channel partners. And either way, the software and market expertise NEC gains from Sphere will allow it to increase the value of its overall product line.
The move is unquestionably motivated by a desire to compete more feverishly with the likes of Avaya, Nortel, Cisco, and even Microsoft (News - Alert), now the software giant has its shingle out in the communications space.
Erik Linask is Associate Editor of INTERNET TELEPHONY, IMS Magazine, and Unified Communications (News - Alert). Prior to joining TMC, he was Managing Editor at Global Custodian, an international securities services publication. To see more of his articles, please visit Erik Linask’s columnist page.

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