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PBXs: today much more luster than you expect.

Remember PBX systems... those silent sentinels in the back room that steadily pump phone calls and (for some of you) data traffic around the clock?

Most people have had their current PBX at least five years. Yours has probably been trouble-free, other than routine maintenance and moves, adds and changes. Quite a technological achievement.

Like you, I would have thought that PBXs are dull. They do voice mail, call accounting, data communications, and for many of you today, call center functions. I called on four PBX experts to find out what has been happening in this market. This column and next month's focus on my discussions with Aries Group/MPSG, The Eastern Management Group, InfoTech Consulting and TEQConsult Group.

From Aries Group we spoke with Byron Battles and Vince Rafferty; from Eastern, Warren Williams; from InfoTech, Eric Schmiedeke; and from TEQConsult Group our expert was Alan Sulkin.

The PBX industry's growth has been sluggish, the rapid growth of the '70s and '80s succeeded by marginal growth or declines in new system sales. A significant portion of PBX revenues comes from add-on components, system upgrades and support services.

What's hot in the PBX market? Says Battles, "PBX vendors are trying to increase the profitability of each sale, rather than focusing simply on the number of units sold."

Sulkin notes that networking is a key issue. "PBX networking is moving toward transparent networks, in which all systems function on a peer-to-peer basis, and users can access an entire spectrum of services throughout the network."

A shift in the industry is noted by Schmiedeke, who says, "We believe the industry is at a turning point. Technology is not the issue. What really counts is the total package, including the service and support you receive from the vendor."

Applications are more important now. Williams sees call centers as a major opportunity; another is enhanced network management via PBXs. Schmiedeke believes broad-band services, multimedia systems and wireless technology are important applications in addition to call centers. Sulkin is bullish on the potential of intelligent network services, working through PBXs to support development of a range of business applications. He envisions PBXs as intelligent gateways to networks of the future.

Battles and Rafferty agree, but believe a higher mission must be accomplished. "Since all PBX systems made today are about the same technically," Battles says, "companies will have to be quite aggressive to gain any additional market share."

Schmiedeke believes the '90s present a range of possibilities. "At one end of the spectrum is third party service, where a vendor simply offers better service at a better price." Examples of growing this basic concept into a major opportunity are WilTel and BellSouth. "More PBX customers will be serviced by someone other than the company that sold their systems. The relationship can be as basic as handling MACs or station installation, and can grow into other areas."

What is important now, as Schmiedeke sees it, is for PBX vendors to sell long-term (seven to 10 years) relationships. Then customers are more likely to buy new, upgraded hardware. At the other end of the spectrum are outsourcing and facilities management, in which varying degrees of the telecomm management function are handled by the outside firm.

Sulkin notes that traditional PBX sales channels--interconnect companies--account for less than 5% of PBXs above 400 lines. More than half of all PBXs are sold through direct channels, with telcos accounting for over 15% of all sales.

In the past, PBX vendors tried to do it all, from sales to maintenance. Today one company cannot address every possible option, so partnering is important.

"PBX vendors realize they can no longer be vertically integrated," says Battles. "They realize other firms can help them provide the necessary solutions." Adds Williams: "It's a requisite for staying in business today."

Pricing is another key issue. Our experts see prices increasing in the short term, a move necessary to assure profitability. Sulkin says discounting is a big problem. "Everybody is trying to hold off discounting, but there's always some firm coming in with a lowball price. Fortunately, end user pricing has somewhat stabilized this year at the station level."

Look for the Big Three to continue to dominate the PBX industry. Also, look for them to make deals with the RBOCs. Aggressive deployment of centrex is likely, particularly through alternate channels like Teleport Communications and Metropolitan Fiber Systems. Don't count out the RBOCs for a minute.
COPYRIGHT 1993 Nelson Publishing
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Kirvan, Paul
Publication:Communications News
Date:Jan 1, 1993
Words:738
Previous Article:Remote, secure access enhances service, streamlines operations.
Next Article:Applications drive ISDN technology at Appalachian State.
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