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Unified Communications: June 03, 2014 eNewsletter
June 03, 2014

Market Growth Favors the Hosted Softswitch

By Susan J. Campbell, TMCnet Contributing Editor

Streamlined communications are a priority focus for companies throughout the world as they look to improved operations to support a healthier bottom line. This is often the focus in the decision process that leads to the hosted softswitch. Companies need a better way to stay connected without spending their entire budget on communications.

The same thought process is driving demand for Unified Communications. According to Infonetics Research (News - Alert), the Unified Communications market is up 27 percent from one year ago, while the PBX market continues to take hits. The latter is down 8 percent in the first quarter of 2014, compared with the first and last quarters of 2013.

“The enterprise telephony market continues to struggle as businesses hold off new PBX (News - Alert) purchases and invest instead in unified communications (UC) applications. Purchase cycles are getting longer, and competitive activity is putting pressure on the market with pricing all over the map,” notes Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research.

In its first quarter 2014 Enterprise Unified Communications (News - Alert) and Voice Equipment report, Infonetics tracks PBX phone systems, Unified Communications, Voice over IP gateways and IP phones. While the hosted softswitch market is doing well, the traditional PBX is holding less appeal for companies throughout the global marketplace. There does tend to be pockets of growth in parts of South America and Europe, yet none of this movement is enough to help lift the market overall.

By contrast, the Unified Communications segment is enjoying significant growth in worldwide revenue compared with the same quarter of 2013. Microsoft (News - Alert) is the recognized leader in this space and is the only vendor in the enterprise telephony segment to post year-over-year revenue growth for the first quarter of 2014. The momentum experienced by Microsoft Lync is certainly helping to drive this leadership position, especially as the demand for streamlined communications continues to grow.

There did appear to be positive growth for PBX revenue in the Caribbean and Latin America. Economic activity has picked up in anticipation of the World Cup, helping to drive positive year-over-year PBX revenue growth for the first quarter. Market share leaders in this space include Cisco, Avaya and NEC, while Mitel made its way into the top four with its merger with Aastra (News - Alert).

Throughout the market, decision makers continue to struggle with protecting legacy investments in the PBX and moving toward Unified Communications with the selection of the hosted softswitch. Still others flock to the PBX to maintain the status quo. The latter as a strategy is losing momentum, however, as the benefits associated with hosted technologies prove a powerful value proposition.  

Edited by Stefania Viscusi


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