The UK telecoms market in 2013

Will the market ever recover to the 2008 pre-recession sales volumes?

Mark Shane, Sales Director at ICON, is bullish about the future of the CPE PBX market.  When asked about the medium term outlook for the channel Mark commented;

“Will the CPE PBX sales volumes reach and exceed 2008 levels? Yes, most certainly they will. Will the future CPE market be the same as the pre-recession 2008 market? No it won’t” 

Growth in the market is expected

ICON is confident that the CPE PBX market will recover to its pre-recession levels.  That much is certain.  What is unknown is how long it will be before it reaches its pre-recession levels and what the market will look like in the future. The future CPE PBX market will be completely different to the market pre-recession.   

Powerful trends

There are powerful trends in the environment which are shaping the future business environment.  BYOD, mobility, and UC are all positive drives shaping and driving the future CPE PBX market forward. Mark commented;

“The consequence of these trends will be that we will see a realignment of sales volumes within the CPE PBX market resulting in some niches declining, others growing, and new ones appearing.”  

 “New product and application niches will appear and niches which existed in 2008 will either no longer exist or be as large. But the CPE market, on the whole, will recover”.  

 “We do not believe that the growth in hosted UC solutions will be sufficient to noticeably depress the CPE UC PBX market.   Published figures suggest that hosted UC solutions are currently around 5% of the total market and are suggested to grow to no more than 10% by 2014. Although this represents high growth the percentage share of the hosted market is too small to significantly impact the levels of business seen by the channel in the CPE PBX market.” 

“We expect to see hosted solutions continue to show high growth rates until the niche matures. The CPE PBX market niche will maintain its dominate market share supported by innovations in the PBX platform and applications.”

Where is the market is going

The days of the plain old CPE IP-PBX are numbered.  CPE PBX solutions which support cell phone mobility, smartphones & tablets, third party UC apps and have the capability to be deployed as a traditional CPE, in the cloud, or a distributed solution are the future.  

In the medium term the flexibility to work with either analogue or IP will be needed if vendors want to capture the legacy as well as the IP sites, but long term this capability is likely to become less important.  FortiNet with its FortiVoice solution offers one of the best examples of a CPE PBX which can work with IP phones, analogue phones or both.

Cloud or CPE  

On the issue of cloud versus CPE, versus centralised, Mark said;

Cloud or CPE PBX?

“The demarcation between the CPE PBX, cloud, or centralised versus distributed solutions markets is very grey."

"Let’s not forget that if a customer has multiple sites and wants a cloud based solution this does not rule out a CPE PBX sale. Vendors such as Vertical Communications with its Wave IP-PBX can deliver a CPE solution which can be deployed anywhere in the network - on-site or in the cloud”

The impact of Smartphones and Tablets  

 Smartphones and tablets will be one of the key driving forces shaping CPE PBX solutions over the next few years.   Mark explained;

“In themselves smartphones and tablets are not the primary market driver.  It is the UC apps which run on these devices and which impact workplace productivity which are the front line drivers for the move to smartphone and tablet friendly CPE PBX solutions."

 

"Most leading edge vendors are already integrating smartphone and tablet support into their solutions.  A prime example is the feature rich mobility friendly solution Wave IP from Vertical Communications.  This delivers all the normal mobility features needed to support cell phone users but also supports the call management solution ViewPoint Mobile for Android and Apple IOS phones.”

The changing CPE PBX  

 The concept of the CPE PBX is changing. Vendors or now delivering highly functional communications platforms capable of supporting third party apps. Mark explained;

“The notion that a CPE PBX is a platform for third party UC apps, just like the cell phone is a platform for apps, is a novel trend but one that long term will provide businesses with many more solution options and the capability to customise and add to the functionality of the PBX platform throughout its life. "

"Vertical Communications is pioneering this with its Wave IP solution which provides a platform to run applications traded on the Vertical AppMarket”

Investing in a CPE PBX platform which allows you to add functionality at will means your communications platform can change, develop, and be customised to suit the needs of the business throughout its working life unlike the monolithic CPE PBX solutions which, perforce, deliver the same functionality at the end of their life as on day one.

AppMarkets for the PBX  

The concept of the CPE PBX as a versatile customisable communications platform allows users to update and change their investment throughout the life of the asset. Mark explained;

“Innovations in the delivery of these CPE IP-PBX applications means customers have the option to enable the integrated applications built into the platform or purchase applications from on-line markets.  For example Vertical Communications in its Wave IP solution offers built in applications which can be licenced at any time but is also providing a market place where apps can be sold and bought.”

Mobile and UC

Mobile friendly CPE PBX solutions have become important in recent years as businesses look to support their mobile workforce. 

UC and BYOD is a potent force

The ViewPoint screen based call management solution for cell phones from Vertical Communications is one of the few examples of such an application.  

 

Mark ended by saying; 

 

“The driving force underpinning all of these trends is the increasing adoption of UC solutions.  But it is the combination of UC with the BYOD that is the motivation behind many of the developments in the CPE PBX product niche."  

"It is when you link UC solutions with smartphones and tablets that the power of UC and mobility begins to be appreciated by businesses from all sectors and that is what the CPE PBX vendor will be looking to harness over the coming years.”

Integrated application

CPE PBX integrated applications fall into one of two categories.  There are the core UC feature set applications which vendors such as Vertical Communications include as standard on its Wave series of PBX and the traditional and not so traditional call management applications such as such as contact centre, call recording, IVR, fax plus a host of others. Mark commented;

“A few years ago integrated applications were the novel differentiators in the CPE PBX market.  Now they have become de facto standard necessary features.  Presence and instant messaging are the UC applications many UC PBX vendors package as UC standard features."

"However, true UC PBX solutions, such as Vertical’s Wave IP, provide a host of other UC applications such as visual voicemail, conferencing, document sharing, and screen based call management for mobiles.”

Telecoms distribution opportunities in 2013

ICON is the UK leader in voice mobility wireless infrastructure solutions (VoWLAN), wireless handsets and specialist IP-PBX solutions and in 2012 it consolidated this position by extending its portfolio to include Wi-Fi infrastructure from the technology leader Extricom.  

The brands it now distributes include the SpectraLink, KIRK, Extricom VoWLAN solutions, and the specialist IP_PBX solutions Wave IP from Vertical Communications and FortiVoice from Fortinet.

Hot products and applications

Hot for 2013 will be WLAN solutions for voice and other triple play applications such as available from vendors SpectraLink and Extricom.  

Growth in BYOD is fuelling an explosion of demand for 4^th generation Wi-Fi infrastructure which can handle high bandwidth voice, video, and data applications and at the same time support a secure and robust BYOD policy.  Mark Shane, Sales Director for ICON commented,

“With its unique channel Blanket technology we expect the Extricom solution to win increasing penetration as a result of its ability to deliver a wide coverage area, guaranteed bandwidth with easy deployment in Triple Play and VoWLAN environments.”

Market Trends

 In 2013 the biggest driver in the market is expected to be the increasing use of BYOD in the enterprise and public space.  People are increasing expecting organisations and venues to provide Wi-Fi access and in educational establishments the development of IT teaching based on tablets is fuelling demand for robust Wi-Fi infrastructure.  These BYOD’s are stretching the capability of traditional Wi-Fi infrastructure especially in situations such as schools and stadiums where simultaneous logons en-masse can cripple a network.  Mark commented,

 “Since partnering with Extricom we have seen a number of enquiries from our channel partners for WLAN solutions in large public spaces and I am confident that we will see a growing demand for 4^th generation VoWLAN solutions throughout 2013 and into 2014 as institutions and public places look for and deploy high bandwidth VoWLAN and BYOD access Wi-Fi networks.”

BYOB and Enterprise Wi-Fi solutions

BYOD - a headache for IT departments.

With over 90 million iPhones and 40 million iPads sold in 2011, there is no doubt that these and other mobile devices are changing the workplace dramatically. Employees want to use their own devices at work – and companies are starting to see the value in letting them do that. The Bring Your Own Device (BYOD) trend has become a way of life.  

As most of these devices do not have LAN ports, the only way to connect them to the company network is by using the WLAN.  This is where the problems start.  Mark Shane, ICON Sales Director explained,

“Organisations need to address the technical demands that the BYOD trend brings. Some key challenges being security architecture designed to support these devices and the risk of losing infrastructure control as private devices connect to the organisation's network.” 

 “The issue,” says Mark, “is that in large-scale WLANs traditional microcell WLAN architectures are struggling to meet the reliability, capacity, manageability and security dynamics of BYOD devices that require high mobility.”

 “The only safe way for an organisation to do this is to use a 4^th generation Wi-Fi infrastructure solution designed specifically for BYOD and Triple Play (voice, video, data).  The problem is that most Wi-Fi infrastructure available today are not 4^th generation."

"The Extricom Channel Blanket solution, supplied by ICON, is one of the few 4^th generation solutions available and only a few years ago, according to Gartner, Extricom was one of only two vendors supplying 4^th generation solutions in the market.”

ICON has been in this space for several years providing SpectraLink Wi-Fi handsets into the enterprise and regularly comes across the problems caused by enterprise Wi-Fi infrastructure which is just not up to the job.  Mark explains,

“The problem is that most of the installed Wi-Fi is 3^rd generation micro-cell technology which is just not adequate when it comes to BYOD and other Triple Play applications."

"When you start using your WLAN for BYOD and telecoms the WLAN takes on a completely different perspective.  It needs to be much more robust and becomes a strategic investment and, in those cases where there is a commercial imperative behind the WLAN it needs to be much more reliable”

How can the channel embrace this opportunity

In general, the traditional telecoms channel has not embraced the opportunity of BYOD and Triple Play or voice mobility.  This is due partly to not having access to a suitable solution or to the specialist knowledge which is needed to deploy a large scale WLAN using traditional microcell WLAN technology.  Mark commented,

“There is a need in the channel market space for a WLAN infrastructure solution which is Triple Play capable (voice, video & data) and which can be deployed and set up without complex surveys and advanced technology tweaking."

"Traditional microcell Wi-Fi infrastructure solutions struggle to deliver against customer needs and the complex deployment surveys and fine tuning needed to deploy them successfully means they are not suited to distribution through the traditional telecoms channel."

"The fourth generation solutions from Extricom overcome these issues and because they do not need complex surveying or fine tuning they are an ideal solution for the telecoms distribution channel.” 

Download a fact sheet

How future mobile technology & the influx of new devices will shape the enterprise space.

Mark believes that there is a mismatch between the trend to use BYOD, the enterprise’s desire to deploy and manage Wi-Fi infrastructure which is Triple Play capable and the traditional telecoms distribution channel’s ability to deliver robust WLAN solutions.  Mark says,

“This will only get worse with the increasing use of 5Ghz Wi-Fi devices.  At 5Ghz all the problems of a traditional microcell Wi-Fi deployment are magnified.”  

With the increasing use of BYOD and the growing trend for public spaces to deploy WLAN for commercial purposes Mark sees an increasingly frustrated end user unless the sector moves to 4th generation solutions such as the Extricom solution.  

For those enterprise organisation’s which have already invested in the earlier generation WLAN technologies the only solution may be a rip and replace if they want to benefit from the BYOD trend.

 “But,” says Mark, “for those in the channel which pick the 4th generation solutions such as Extricom Channel Blanket technology the opportunities seem to be boundless.” 

ICON grows with Extricom Wi-Fi WLAN

In November 2012 was ICON appointed distributor for the Extricom Wi-Fi WLAN solutions.

The Extricom Wi-Fi WLAN infrastructure solutions are designed for voice mobility and other enterprise Wi-Fi applications and from November will be available to our channel partners.

The Extricom Wi-Fi infrastructure solution is the necessary solution for Voice over Wi-Fi (VoWLAN).  It overcomes the deficiencies and limits in traditional Wi-Fi deployments which are the cause of the poor voice mobility performance commonly seen when the Wi-Fi infrastructure uses the cell based technologies from the traditional vendors.

Uses include Education, Health, Stadiums, Manufacturing, Government and Retail

The Extricom infrastructure solution is a ground breaking advance for ICON channel partners who can now quote for complete voice mobility solutions and deploy both the Wi-Fi infrastructure and handsets.  The solution is compliant with all Wi-Fi standards. 

ICON’s dominant position in the UK market as specialist provider of voice mobility solutions means that for the first time the market can source a robust and reliable Wi-Fi voice mobility solution (infrastructure and the handsets) from a single knowledgeable source. 

Mark Shane, Sales Director, ICON, commented,

“Extricom is an established and proven product around the world and is the necessary infrastructure if you want to deploy a robust Wi-Fi handset solution.  It is the natural partner for our range of Polycom Spectralink Wi-Fi handsets.  We see this solution opening up many new opportunities for our partners in the voice mobility Wi-Fi market.  We are pleased to have been chosen by Extricom as its strategic partner in the voice market.”

Charles Burns, Sales Director UK and Ireland, Extricom, commented,

“This is an exciting step for us.   ICON has a pedigree in voice mobility wireless solutions and distributes Wi-Fi handsets from the leading global player.  With the advantages in VoWLAN infrastructure that Extricom has over the traditional Wi-Fi vendors I believe that ICON and its Channel Partners have the potential to dominate the VoWLAN market in the UK.  Our relationship with ICON means that we have a partner in the key strategic position of being one of the few UK distributors able to supply both the Wi-Fi infrastructure and Wi-Fi handsets needed for an enterprise VoWLAN solution and support it technically.”

The UK PBX market - a review in 2012

Where is the market is going?

Full UC trend continues

The structural trend towards full UC is continuing with vendors packaging more UC features into their standard offering.  The Vertical Communications Wave and Microsoft Lync CPE solutions both offer a mobility solution for mobile phones.    

Downwards for price

However, a key trend to emerge in this market since the start of the year is the downward pressure on the price performance curve.  In the last quarter vendors have launched CPE solutions with increased functionality and higher connectivity at price points which drive the solution down the price performance curve.   

The new FortiVoice IP-PBX

Vertical Communications has bundled 5 years warranty and a free BYOD app with its CPE Wave IP, Fortinet has rebundled and renamed the TalkSwitch CPE solution in a new offering called FortiVoice with offers a substantially lower cost per line for the end user.

Longterm this downwards pressure on the price performance curve will have the effect of tightening the market those in the channel with solutions which are not value competitive.

 

Integrated application- BYOD functionality

True Out-of-the-Box integration is rare in the CPE market but a few vendors are beginning to bundle applications with their solution.

The focus seems to be on BYOD functionality and UC capability for BYOD.  The top vendors are Microsoft with its Lync platform and Vertical Communications with tis Wave solution.  Both offer free mobile apps which extend the capability of the CPE PBX to the mobile phone. 

The Wave BYOD solution is so integrated with the CPE that a call made by a mobile phone user is indistinguishable from one originating from a desk handset.

Hosted telephony & its impact on CPE solutions

CPE business to continue

Hosted solutions have not traditionally competed with the CPE solutions distributed by ICON and long-term the impact on of hosted solutions our Channel Partner CPE business is not expected to change radically from what it is today.    

ICON has always acknowledged the importance of hosted solution in the marketplace but is of the view that this is not a disruptive technology.  Longterm it is unlikely that the market will migrate to hosted solutions.  

The reasons to buy hosted

The motivation for hosted as opposed a CPE solution is driven by the financial imperatives of the firm not its communications requirements.  Hosted or not hosted decision is firmly based in the firms need to manage Capex by using Opex.  The only scenario in which hosted solutions will displace CPE equipment is as a result of some financial imperative which makes investment in non Capex solutions attractive.  A fiscal policy which favoured Opex solutions would have this impact but in the medium term is not likely.

Accreditations costs - slipping out of control?

As distributor for a range of global brands ICON has always recognised that the cost of accreditation can be a formidable barrier to the Channel taking up a solution. When you need to guarantee a certain percentage of staff skilled in the solution and hold stock this can be a significant capital expense even for an established firm.   

High accreditation costs have the effect of tying a reseller into a vendor restricting the options for growth.   

In the UK ICON has provided one of the most open accreditation schemes available.  Its solution training and accreditation for its Vertical, and Fortinet IP-PBX solutions have always been delivered at subsidised cost.