IP-telephony drives PBX market resurgence.(Voice-Data Convergence)(Industry Overview)

Enterprise telephony is all about IPT--and real people are buying real systems. About 395 million more stations are to be converted worldwide.

The PBX market grew by 6.9 percent in 2003, and coming on the heels of three consecutive down years, the rebound is welcome news. The improved economy helped spark the turnaround, as it enabled some buyers who had postponed purchase decisions in 2000-2002 to finally make their move. But the major driver has been IP-telephony. While horror stories are still heard about implementations gone wrong, there's no question that the technology has matured.

The manufacturers also have taken proactive steps to stimulate the market. Migration and upgrade paths to IP-telephony are smoother for all but the most geriatric PBX models, and new, more functional IP-telephony products have become available. Moreover, the vendors have been more forthcoming about their IP-telephony strategies, which, combined with lower prices for IP phones and media gateways, reduces customer risk.

For 2003, PBX line shipments are estimated at 6.6 million stations, of which 4.6 million are for traditional circuit-switched stations (analog and digital), and two million for packet-switched (IP) stations. The shipments of IP stations doubled from 2002, while circuit-switched stations declined slightly more than 11 percent. Circuit-switched port shipments will continue to drop for the remainder of the decade, but increasing demand for IP peripheral equipment will offset this decline and drive moderate overall market growth. But shipments of traditional analog and digital lines will not disappear anytime soon, because many customers will continue to purchase significant numbers of add-ons to their circuit-switched PBXs, even as new IP stations are installed.

The PBX market forecast for line station shipments (TDM/PCM and IP) and total system revenues for the remainder of the decade is shown in Figures 1-3. Note that the shipment and forecast data presented in this article is based on PBXs, and does not include KTS/Hybrid.

IP Telephony Takes Off (Really)

The growth rate for IP station shipments, while impressive, is still coming off a small base. That's starting to change-2 million stations shipped is nothing to sneeze at--and we'll start to see truly significant numbers over the next two or so years. By 2010, IP stations will account for more than 75 percent of annual station shipments, while non-IP shipments will be evenly divided between analog and digital endpoints (for the first time since the late 1980s).

There are several reasons why IP station shipments are increasing so strongly:

* The maturing of IP-telephony technology.

* Increased product availability from both newcomers and traditional PBX vendors.

* Absence of development/promotion of circuit-switched products.

* Falling prices for IP telephone sets and media gateways.

* Greater customer acceptance and recognition of the performance benefits of IP-telephony.

* Deployment of LAN/WAN infrastructures that can support quality of service (QOS).

* Unrelenting marketing and promotion of IP telephony by suppliers, distributors and the media.

IP-telephony is the natural evolutionary step for digital communications, and after several bumpy years, the technology is going mainstream. The initial market positioning emphasized cost savings--reduced long distance expenses via toll bypass, reduced costs for wiring and cabling and, because of standardization, lower equipment costs. Except for toll bypass, however, many of those claims turned out to be overblown, in part because of the offsetting expenses to upgrade the LAN/WAN infrastructure with switches and routers that were equipped with QOS and higher-security capabilities.

We then started hearing about all the new applications IPT would enable, but so far few have materialized. Both users and vendors have a long way to go on the IPT applications learning curve.

Ironically, the most important benefits that IP-telephony delivers to the enterprise are the ones least advertised: Greater flexibility in system architecture configurations and higher levels of redundancy and resiliency. Traditional circuit-switched PBXs have numerous single points of failure, because of two inherent design conditions: Major common control elements are centralized, and there is a fixed, single control signaling transmission path for each unique station user port (including the port circuit interface card and desktop telephone instrument).

By contrast, an IP-PBX can reduce single points of failure, because of its distributed topology. For example:

* Redundant common control elements, such as active (primary) and standby (secondary) call telephony servers, can be distributed.

* Each IP endpoint can register with multiple gatekeepers (usually an embedded telephony server function).

* Voice signals between two IP endpoints can be transmitted …