InformationWeek
Defining The Business Value Of Technology
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May 14, 2001 |
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IP PBX: Close Call
The IP PBX--an Internet-compatible alternative to the traditional circuit-switched enterprise phone system--isn't the answer for all business networks today. But new features and greater functionality are extending the appeal of packet-switched enterprise networks and early adopters are now deploying IP PBXs. When will it make sense for your company's network?
By Candee Wilde
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ending voice traffic over IP-based networks--once touted as The Next Big Thing--has yet to take hold in a significant way. The promised savings and flexibility have not been appealing enough to cause businesses to give up proven telephone systems. But sales of IP-based PBX phone systems are picking up now and the pace will quicken during the next few years, analysts say.
PBX stands for private branch exchange. It's the phone switchboards or phone systems used by businesses. (See our sidebar, IP PBX Basics, if you need to come up to speed.)
For now, sales are concentrated within a small number of distinct user groups. The most likely IP PBX buyers are schools and universities, companies that are building new offices or rewiring old ones, and young or fast-growing companies with more than one location. But over the next few years--as IP PBXs become more robust and scaleable, early deployments prove successful, and standards emerge--the voice-over-IP alternative will have broader appeal among enterprise users. (See the sidebar, Settling On Standards for an overview of the current state of affairs.)
In 2000, roughly 17% of U.S. businesses began implementing IP telephone systems, according to a new study by The Phillips Group InfoTech, a global research and consulting firm. By 2004, the researchers say, more than 80% of U.S. enterprises will adopt LAN-based IP telephone systems and shipments of IP PBX systems will almost catch up with declining sales of traditional PBXs. About 267,000 IP PBXs shipped in the United States last year; by 2004, shipments will spiral to 5.7 million. In contrast, traditional PBX shipments will fall from 7.7 million last year to 6.2 million in 2004.
Competition is heating up between the early IP PBX market leaders--particularly data networking vendors Cisco Systems and 3Com Corp.--and the traditional PBX manufacturers, who were late getting out of the gate with IP products. Until late last year, 3Com had dominated the market, says Frank Stinson, senior product manager at InfoTech. But Cisco edged out front during the third quarter of 2000. "Cisco has been through several releases of their [IP PBX] software, and with each version it expanded the capacity of the system. They've reached a point where they can really target large customers with their systems," Stinson says.
Both Cisco and 3Com bought an entrée into the IP PBX industry by acquiring companies that were already marketing products. Cisco bought Selsius Systems Inc. in late 1998 for its proprietary IP phone system, which the company since has revamped into a standards-based version that fits in with its other networking products. A few months later, 3Com purchased NBX Corp., which made IP telephones and Ethernet PBXs.
As recently as January 2000, many of the traditional PBX vendors weren't even shipping IP PBXs, according to Allan Sulkin, a veteran PBX industry analyst and president of TEQConsult Group. Siemens was the only traditional PBX vendor of the top 5 (Avaya, Nortel, Siemens, NEC, and Mitel) that was shipping systems with IP capabilities to the desktop, he says. By early 2001, however, all five had systems with IP capabilities.
"A year ago, the traditional competitors were behind the curve," Sulkin says. "Today, they've caught up with the curve and tomorrow they will be leading the curve."
Because they were late to market, the traditional PBX vendors are not perceived as leaders in the development of voice-over-IP technology, says Marc Liggio, VP of broadband research for Allied Business Intelligence Inc. Traditional PBX vendors' "IP offerings are pretty much as far along the road as any one in the market, including Cisco, but the perception is they are not even players," he says.
Ironically, as the old-school PBX companies gain ground, the data networking companies may face some growing pains. Supporting hundreds, or even thousands, of users will test the mettle of their IP PBX systems, which have been deployed in mostly smaller installations so far, according to Gartner analyst Rich Costello.
"Ironically, the reliability and capability of traditional PBX systems are major obstacles to the success of IP PBX systems," Costello says. "So far, the hype over IP telephony has overshadowed the technology's practical applications and benefits. It still faces issues such as scalability, time-proven reliability, standards compliance [see sidebar], and quality-of-service provisioning." (Quality of service refers to various measures of service delivery over a virtual connection, such as delay, throughput, or bandwidth.)
So, how are real IT departments deploying IP PBX solutions? And why? We've assembled several examples to demonstrate the range of possibilities, the business approaches, and the challenges yet to overcome.
Vane Brothers: The Old System Is Outdated
Menlo College: Starting At Ground Zero
Sells Printing: A Migration Plan
Michigan Technical University: Network Convergence
Slow Changes
Despite the promise of IP telephony, and perhaps its inevitability, analysts stress that the change will take years. Critical issues about IP PBXs, such as interoperability, standards, and architecture, remain unsettled. "There is virtually no interoperability among vendors at the moment. Talk of that comes and goes," says IDC analyst Paul Strauss. For now, Strauss says he recommends enterprise users try an IP PBX system "in a medium-sized office, where it wouldn't be a disaster. I would use that experience to my advantage for planning in the future."
For the next year or so, Strauss cautions against ripping out installed phone systems or buying new ones (unless the need is really pressing). "I would wait for some of these problems to shake out and especially to see some hot applications come out," he says. Strauss predicts wireless office phones, phones with more graphics capabilities, click-to-dial features, close integration with corporate databases, and most of all, exciting new applications, all could make the phone system a better, more productive tool.
Says Strauss, "I see a time when the phone will be more fun to use."
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