2007 PBX Sales for Q1

As we approach Q3 2007, we now have our first look at the PBX-world in Q1. Since the close of Q1 we have had Inter-Tel announcing a merger with Mitel, and Avaya being purchased by a private equity company.

Here is what the world looked like on April 1, 2007:

North American PBX Line Shipments, Q1 2007

Line shipments, in thousands
% Of all line shipments in North America
Category or sector of products sold

Nortel 705 18% Hybrid
Avaya 658 17% Hybrid
Cisco 584 15% IP-PBX
NEC 399 10% Hybrid (mostly)
Inter-Tel
/Mitel 368 9% Hybrid & IP-PBX

Top 5 OEMs

70% Share for all sectors Total Lines 3,900

My numbers come from Dell'Oro Group.
One of the striking things about this view is how it illustrates how competitive this market is. The above chart, which combines IP and Hybrid sales, tells us that no one owns even a full fifth of the market, but it also tells us that 5 companies (or 6 brands) do make between them seven of every ten lines shipped.

Growth flattens out: IP grows; Hybrids retain three to one edge

North American PBX line shipments were flat Q/Q but are expected to have picked up during the second quarter (whose numbers are not yet available). For a number of years, a flat Q1 has become a seasonal pattern, so the market expects this is a typical year for growth. TDM shipments (yes- there are still TDM shipments) declined 4%, IP picked up 5% while Hybrids were flat. Hybrids remain the largest part of the market with $1.1 billion is sales, while IP (that is a pure IP-PBX, with no TDM at all) had $3.5 million (numbers are global).

It is worth noting that Nortel, Avaya, NEC and Mitel compete closely for the Hybrid space, while Cisco is a pure IP player. Mitelís planned purchase if Inter-Tel makes Mitel into a kind of dual player, with a brand in each sub-market. You can see that had Nortel purchased Avaya, the new entity would have dominated the Hybrids space in the way Cisco holds a large share in the pure IP space. If Cisco had purchased Avaya, the new entity would have been strong in both sectors.

Globally, Siemens remains a strong player, regaining the number one position from Alcatel in Europe. Indeed, in global terms, Avaya leads the Hybrid market with 25% market share, with Siemens at 22%, Nortel at 16%, NEC at just under 9%, with Mitel at just under 4% (this does not count Inter-Tel which is under the IP market). Cisco holds over 60% of the IP-PBX market.
More moves, adds and changes?

Many analysts expect more moves, adds and changes, and not necessarily driven by the OEMs product lines but by the many associated assets the OEMs have. Many manufacturers now have a very large share of their revenue from maintenance contracts, and income from software licensing. These might make the PBX makers attractive since these can be developed into stable income steams that might prove to be less exposed to the economic cycle.

Doug Green
Telecom Reseller