The pandemic has accelerated the death of PBX as traditional vendors move to a cloud strategy, according to Cavell Group’s Head of Research, Dominic Black.
Speaking at the analyst’s annual Cloud Comms Summit Europe last week, Black updated attendees with the latest report on the UCaaS market, revealing that traditional PBX vendors are pushing their solutions into the cloud and encouraging cloud adoption among partners.
“The thing that the pandemic has really changed is the death of the PBX,” Black declared.
“We can see that pretty much every single major PBX provider has now had to put a cloud strategy in place; Cisco and Mitel are pushing their own solutions into the cloud and trying to get adoption from their partners to take those services in the cloud, we saw NEC partner with Intermedia to offer that cloud solution to all their PBX providers and we saw RingCentral working with Unifi Alcatel and Avaya to help leverage those PBX bases and help movements of cloud”
“These PBX vendors now see their future being within the cloud and no longer on premise.”
Black added that there had been some hits in the PBX space too, with Panasonic announcing the shuttering of its Business Communications arm late last year.
“There have been some losses in the market with Panasonic last year saying, ‘We’re no longer focusing on this market – we don’t see it as a viable opportunity,” Black continued.
“That’s really clear from what we’ve seen as well, in speaking to service providers and resellers. The cloud is really the future now, and it’s here and happening.”
Channel opportunities
The UK stood out among its European counterparts for its base of six million cloud comms users by the end of Q4 2020. Though other markets, such as the Nordics and the Netherlands, are starting to pick up, international vendors such as RingCentral and Vonage are starting to see significant market penetration in the UK, which Black predicted will be replicated across European markets in the next few years.
However, the SMB space for comms is “congested” in certain markets, including the Netherlands UK, and Black predicted that cloud penetration rate climbed to between 80 and 90 per cent in the next five years.
“The SMB space is incredibly congested and there’s not a huge amount of market share left to go in that space,” he stated.
“We’re expecting that over the next five years penetration rates into the PBX and available market base will reach around 80 to 90 per cent in some of those core markets like the UK and Netherlands where cloud adoption has been much stronger.”
This has resulted in vendors concentrating on their indirect sales channels, with 70 per cent of service providers in the UK selling through partners. Vendors have to focus on what they can provide these partners going forward, Black added.
“We’re seeing some of the larger providers looking at how they can leverage the channel,” he said.
“RingCentral is increasing their channel annual recurring revenue by 55 per cent, 8X8’s channel bookings are growing 23 per cent and NFON is expanding their partner networks to over 2,500 partners across the whole of Europe.
“These are significant numbers and really starting to ramp up these channel programmes, so when you’re looking at coming in selling through the channel, you’ve got to be looking at what your differentiator is, why are you different from the rest of the market and what can you do to offer that differentiation.”
