Losing more ground in the PBX race is Nortel, which reported PBX line market share of 14.2% during the first nine months of 2007 compared to 17.0% in the first half, according to Sulkin, who reports drawing his findings from supplier-provided data. Sulkin cautions that, unlike Nortel, Avaya’s and Cisco’s data are bolstered by shipments of smaller systems that some would classify as key systems instead of PBXs, like Avaya’s IP Office. Still, it’s the lowest market share Nortel has held since the mid-80s, notes the PBX guru. [See chart of all manufacturers’ market shares] 64% Plan to be in PBX Market within 3 Years There’s a strong likelihood you’ll be contributing soon to Sulkin’s PBX sales stats. As many as 64% of the 180 communication technology professionals to respond recently to Voice Report’s 2008 National PBX Survey said they would be in the market for a PBX within the next three years, and 37% said they would be looking to replace their primary PBX within three years. It’s no wonder that the lifespan of PBXs also is getting shorter. The median age of a primary PBX in Voice Report’s survey was eight years, compared to our 2007 PBX survey when the median age was 10 years. [See chart] Regardless, your next PBX purchase will not be taken lightly, and given the questions surrounding the traditional market leaders, even your incumbent vendor is not likely a safe bet. Take Siemens, for example. Despite the German company’s impressive worldwide install base – they’re in more than 120 countries – the company held a fifth-place, 5.8% share of the PBX lines shipped in North America during the first three quarters of the year, according to Sulkin. That’s down from 1985, when Siemens’ roughly 15% market share was second only to AT&T. Though it was successful in selling off components of its telecom equipment manufacturing division in 2005, Siemens was still looking for a buyer for its enterprise networks business on Nov. 28, 2007, according to a filing on that date with the U.S. Securities and Exchange Commission. Also troubling Siemens is a €201 million ($293 million) fine issued by a Munich court after a former manager of its Com Group was linked to 77 cases of bribing officials in multiple foreign countries between 2001 and 2004. Investigations are ongoing in Switzerland, Italy and Greece. Nortel & Avaya Battle Perception Nortel might not consider buying Siemens’ Com because there would be too much product overlap, suggests Irwin Lazar, principal analyst and program director for convergence and collaboration at Mokena, Ill.-based Nemertes Research Group. In fact, neither he nor Doug Carolus, director of consulting services and operations for Minneapolis-based technology consulting firm N’compass, are sure Nortel will stay in the PBX game. The Toronto, Ontario-based company, which reported losing $113 million on $7.75 billion revenue for the nine months ended Sept. 30, 2007, could look to sell its enterprise PBX manufacturing division, Carolus and Lazar both speculate. However, whichever company might acquire Nortel would likely retain its PBX business for the foreseeable future, Carolus adds. Avaya, too, has given its customers cause for anxiety. The company changed top managers in August 2006 [VR 8/7/06] and announced in June that it was being taken private by Silver Lake Partners and TPG Capital [VR 6/11/07] as part of an $8.3 billion acquisition, which closed Oct. 26. Though it remains to be seen, it’s reasonable to fear that Avaya’s new owners could trim support staff or cut back on new development to make the company attractive for sale within three years, says telecom consultant Gary Audin, president of Delphi Inc., in Arlington, Va. However, Avaya’s margins remained healthy in the quarter ended June 30, according to its last quarterly report filed with the SEC as a publicly traded company, making $55 million in net income on $626 million in revenue. The fact that Silver Lake brought in former Cisco Chief Development Officer Charlie Giancarlo as a managing director effective Jan. 1 also is “a very good sign” that Avaya is a long-term investment for the private equity firms, Nemertes Research’s Lazar says. Attitude, Enthusiasm & Savings Behind Health System Selection of Cisco The only one of the three leading PBX vendors without questions surrounding its financial strength or direction seems to be Cisco. Cisco made nearly $2.21 billion net income on $9.55 billion revenue in the quarter ended Oct. 27, though Cisco doesn’t break out its telecom revenues separately in its SEC filings. But Sulkin doesn’t believe Cisco’s relative stability is the reason it is currently moving ahead of the prior PBX market leaders. Instead, he chalks that up to the strength of Cisco’s “marketing machine.” “What [IT people] have learned about voice, they've learned from Cisco,” Sulkin says. Cisco long has had a reputation of getting its PBXs installed by leveraging its relationship with data networking pros and sidestepping telecom managers. But Senior Telecom Analyst Kathy Burek reports that she was involved in discussions with Cisco from the start of Froedtert & Community Health’s search for a PBX for a 300-person clinic. The VAR’s reps won her over with their enthusiasm and the fact that the Milwaukee-based health system could save on installation costs with Cisco. “Because the Cisco Unified Call Manager is a server-based environment with switches, routers and gateways, we could piggyback our knowledge with the networking team’s knowledge and do a huge chunk of the installation ourselves,” Burek reports. Meanwhile, Avaya, that longtime darling of voice departments, has been getting bad grades for inflexibility. “Avaya is difficult to work with,” says Ron Garske, IT manager of telephony technologies at Madison, Wis.-based CUNA Mutual Group, where five PBXs, including at least one Avaya S8XXX-series switch, serve 5,000 users. “They have [too] many processes that make it hard to get a quote. [You] cannot buy certain systems or add-ons without a signed SOW [statement of work].” “Avaya doesn’t lose on product, they lose on attitude,” Sulkin agrees. “The problem with Avaya is, they still think if they have the best product, people should buy them for that reason only.” But don’t count on Cisco to hold its new PBX crown for long. Microsoft’s entry into the voice market with its Office Communications Server 2007 and suite of UC software could make Avaya’s 20% market share look good, Sulkin says. “Just like Cisco steamrolled voice people from the data side, Microsoft will steamroll voice people from the software and applications side,” Sulkin predicts. “History will repeat itself.” ( Editor's note: Don't miss the Jan. 17, 2008, issue for more results from our 2008 National PBX Survey. Based on our results, word from your peers and guidance from some of the top PBX experts, we've identified the five most important points of compatibility when it comes to PBXs and evaluated the three PBX market leaders on each. | 
