Buyers' Market Booming for PBX Phones

An industry report predicts that managed PBX VoIP service will likely double by 2016. Also, it now appears to be a buyers’ market for PBX phones.

A new research report says PBX phone systems achieved a “buyer power score” of 4.4 out of 5. That shows the “extremely favorable market conditions” that current buyers have, according to IBISWorld.

Reasons for the relatively high score include lower prices, many substitutes, the fact there is little in the way of product specialization, low costs for switching, and limited volatility in prices.

"Thanks to these factors, the market is in prime condition for buyers to negotiate lower prices on PBX systems," Andrew Krabeepetcharat, an analyst at IBISWorld, said in the statement. He explained that competition, because of current prices, is relatively high, especially because of low-cost competition from different nations. Competition is further increased because products are comparable and standardized. Switching suppliers is not expensive.

Overall, there is a relatively high level of competition, too. There is a “wide variety of substitutes available to buyers," Krabeepetcharat noted.

When selecting phones, many companies use individual landlines for each employee. That costs more but quality is an issue for them. In addition, hosted PBX services and free open-source PBX software give options, too. “These additional options boost buyer negotiating power,” according to the firm’s statement.

“Prices are anticipated to continue falling at a slow and steady rate through the next three years with very low price volatility,” the firm added in the statement. “Low volatility is positive for buyer power because it helps buyers accurately budget for a PBX purchase without risk of price spikes. The only significant detractions from buyer power are the moderate levels of supply chain risk and vendor financial risk associated with PBX systems.”

It was also reported that low profit margins in the market has led to more mergers, acquisitions and bankruptcies. The report identified four top vendors as: Cisco Systems, Avaya, NEC Corporation and Toshiba.

In another report, Infonetics Research predicts that by 2015, the VoIP services market will peak at around $74.5 billion.

“More small, medium and large business customers are adapting to the new technology and features offered by hosted PBX resellers in order to cut back on costs," Chris Griffith, COO at White Label Communications, said in a statement. "It is not news that businesses are looking for ways to reduce expenses and save time, but the idea that they are turning to outsourcing their communications systems points to a promising future for the telephony trade."

In fact of all VoIP customers, almost half select a managed service – which leads to more flexibility, features and savings.  In addition, seats for hosted VoIP will likely double between 2012 and 2016, the study said.

Edited by Alisen Downey