Connection Telecom emerges as leader of SA hosted PBX market

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Connection Telecom has taken early leadership of the key hosted segment of the bmi-t
enterprise telephony market, according to BMI-T’s SA PBX and Emerging Voice Systems Market Study 2013. 

The study found that after sluggish uptake, hosted PBX is finally taking off and is among the few growth areas in the entire PBX market (itself in decline), along with on-site IP-based converged PBXs (called CBXs by BMI-T).

The future is here

Rob Lith, Business Development Director for Connection Telecom, says the success is due to the fact that we fully leverage the benefits of hosting and the power of the Internet Protocol – the voice architecture of the future.

Connection Telecom pioneered IP-based PBX solutions locally when it launched the carrier-grade Telviva switch in 2009, as a private enterprise or public hosted virtual server-based switch.

Based on standards-based, open technology, the Telviva switch is extensible to add future unified communications functionality as and when it becomes available (including videoconferencing), as well as full business process integration (including CRM and BI).

As a hosted solution it lets companies manage telephony users and call centre agents centrally with ease, with the flexibility to let users work remotely, while still realising call savings (free on-net calls) and savings on telecoms cabling with standard network infrastructure.

The findings

  • Legacy and CBX/IPT

Overall shipments of large legacy PBX systems will likely continue their decline, while medium-sized and small systems and CBX (IPT) in general have a better outlook, BMI-T finds. The study also found the small and large size categories for the Legacy systems unit shipments declined sharply since 2010.

  • Open-ended growth path for hosted

“The unknown factor that makes predictions hard for overall shipments is to what degree legacy and CBX/IPT systems will be replaced by hosted systems, or retained in a sweating of assets,” says David Meintjes, MD of Connection Telecom.

By 2017, BMI-T optimistically expects hosted systems offered with handsets to earn R400 million, hosted systems without handsets, including annuity revenue, to bring in R350 million, and new hosted systems without terminals to make R100m. In such a scenario, hosted revenues would make up 15% of total revenues of all categories – legacy, CBX/IPT and hosted PBX revenues.

What is optimistic for hosted is pessimistic for the rest of the market, and vice versa, says Meintjes. Hence, in a pessimistic scenario for hosted, where there are concerns over VoIP security, confidentiality, reliability, quality and loss of control, revenues will be more of the order of R150 million in total, making up around 5% to 6% of total revenues across categories.

Projected revenue growth hosted PBX (optimistic view)

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Source: BMI-TSAPBX and Emerging Voice Systems Market study, 2013

Handsets – indicators of underlying growth

While analogue handsets still dominate in unit shipments, IP dominates in revenue with nearly R200 million in 2012.

For the first time, 2012 saw IP handsets overtake the traditional digital handset in unit shipments which can be attributed to the price reduction of IP handsets(entry-level IP handsets now sell for under R1000).

Market drivers

BMI-T’s Selvie Naicker, the report’s author, says the main success factor of hosted solution providers is their focuson large customers, which benefit most from the savings of singlecentrally-hosted solutionsacross multiple sites, as well as zero-rated VOIP calls between branches.

“Connection Telecom’s customers are a mix of small and large, with a few large accounts in retail and financial services dominating revenues,” it finds.

The authors note that early movers have become entrenched in the market, an advantage that small players and others invested in legacy network infrastructure will find difficult to emulate. For these players it will be more cost-effective to ‘white-label’ an existing solution such as Connection Telecom’s than to create it from scratch.

Other factors include the rising credibility of hosted PBX solutions, with most of the bigger telcos and ISPs already offering or launching products, as well as the abovementioned cost advantage of VoIP.

Many local providers have gone with Broadsoft – a first-world favourite – but Connection Telecoms offers a price advantage over this soft-switch vendor, states the report.

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