IP Centrex: Too Much Hosted Boasting?
There’s been a wave of IP Centrex announcements lately, but there are some reasons to doubt that these will translate into big profits for carriers. Up until now, it seems, carriers have been expecting to enter a wild goose chase and actually bring home a bird.
Here's why the IP Centrex story isn't as polished pearl pretty as some have said:
SBC Communications Inc., likewise, has been offering a Centrex service and is only now moving toward IP Centrex. This suggests that although the big boys are feeling the heat from alternative IP Centrex providers, they are only beginning to test the waters.
Infonetics Research Inc.'s next-gen voice analyst, Mattias Machowinksi, says the hosted IP service providers will face a tough test ahead. “It doesn’t look like the managed service market is going to grow too much. If it is to grow significantly, businesses will require a lot of education from service providers to relinquish control.”
Enterprises are likely to deploy their own IP PBXs and possibly only use IP Centrex services for linking remote offices. If the IP Centrex market fails to win over PBX customers and relies on Centrex upgrades to IP, analysts say it will only account for roughly 3 percent of business lines in the U.S., and even less in Europe where it is more of a niche market.
If the future of IP Centrex is so bleak, why is there so much interest in it? It's a turf war, really. IP Centrex is a way for alternative carriers to encroach on the RBOCs' Centrex customers, while, conversely, it enables RBOCs to defend their turf.
There is also some financial attraction. Heavy Reading's latest report, SIP Hosted Services: A Heavy Reading Competitive Analysis, finds that service providers should either go big or go home. The report says that a carrier with an assumed 25 percent market share, and an existing IP network, can reach breakeven in the third year of deployment.
For a provider with less than a quarter market share, however, the return on investment is not so rosy. Its success will be reliant on the widening of its addressable market to PBX replacement customers.
— Daro Clark, Research Analyst, Light Reading Insider
The latest Light Reading Insider -- “VOIP: the Enterprise Options” -- explores the available hosted VOIP services and their addressable market.