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KTS-PBX: Digital yes, IP no

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VoicenData Bureau
New Update

This year, like the past couple of years, the KTS-PBX market in India

appeared to adopt newer technologies and moving away from the legacy systems.

But, at the ground level things did not change. While the leading telephone

systems manufacturers-sellers kept harping on the benefits and capabilities of

IP-enabled or pure IP switches, user organizations remained largely committed to

traditional systems. There was a significant change in the composition of the

market with many analog system users preferring digital PBX. Another notable

trend this year was the emergence of annual maintenance contracts as the cream

of the business. While for manufacturers, they helped build customer loyalty,

for resellers and dealers they helped improve margins and emerged as an

important revenue source.

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Market Size

The KTS-PBX market was in the region of 1.1 million lines. Of these, around

30 percent or 3.3 lakh ports would account for the KTS market. In value terms,

the PBX market reached up to Rs 370 crore in 2000-01. The size of the KTS market

would be Rs 92.4 crore with the average per port price being Rs 2,800.

In value terms the PBX market grew by 19.35 percent over the 1999-2000

Voice&Data estimate of Rs 310 crore. The market had grown by almost the same

percentage that year. However, in terms of number of ports, the PBX market grew

by only 10 percent over the 1999-2000 figure of seven lakh ports.

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While the high-end of the market accounted for 45 percent of the market in

terms of value, only 25 percent of the ports installed were in the higher end.

There was a sharp decline in the number of KTS units sold largely because a lot

of users preferred PBX systems.

Price

The average price per port continued to slide, as they have been doing over

the past five years. But this was largely true of the low-end switches available

in the grey market. In the more organized sector, the prices remained the same

more or less even though telephone systems came packed with more enhanced

features. The per port cost of a low-end PBX stood between Rs 1,500 to Rs 2,500.

As for the high-end PBX, the per port cost was in the range of Rs 3,500 and Rs

7,500 depending on features. Vendors, especially those who have a manufacturing

base in India, improved their margins because of savings from a lower component

cost. The PBX components cost less because of lower government duties as well as

the usual year-on-year decline in their prices. There was not much cost

difference between the digital and analog systems, especially when it came to

brands like Panasonic and Nitsuko.

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Drivers

Leading

Players
High-end Low-end
Avaya Accord
Ascom Copper Connections
Ericsson Enkay
Nortel National Panasonic
Alcatel Nitsuko
NEC  
Tadirant  
Siemens  

The replacement market remained the biggest driver for the segment. A large

number of small and medium organizations, which were earlier having analog

switches, are believed to have gone digital. Information technology companies

and the hospitality industries were the biggest drivers of the industry. Large

enterprises also switched over to digital PBXs but only partly. This means that

while a digital switch replaced the main analog switch, the user end remained

analog. This was because of the fact that digital phones are hugely costly when

compared to analog phones. But small companies with less than 200 users were

going for pure digital systems.

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A new market that was noticed during 2000-01 was that of the up-market

residences and farmhouses. But it was small. CEOs, MDs and other affluent people

emerged as a potential buyer. This is because of, among other things, the reach

of the people who are selling these systems.

Initially growth did come from the call centers, but later the market dried

up. The PBX market had great expectations from the call center industry but it

was a major setback, especially for lower-end analog PBXs. Lucent, Nortel and

Ericsson were the most sought after PBXs in the call center segment.

Growth for players like Usha Informatics came from the private basic

operators’ need for last mile connectivity–DID and GPBX largely in Mumbai,

Ahmedabad and Bangalore.

Trends

While at the bottom of the market, PBX remained merely an analog voice

system; digital PBXs were largely seen as total communications systems and not

just a voice telephony system. At the same time while IP-based PBX were talked

about a lot and users looked at it as the future of enterprise communication,

there weren’t any installations. Pure IP was too expensive and also users were

apprehensive of the maturity and reliability of the technology. User queries

with regard to flexibility of migration (in their legacy systems or the system

they were buying) to IP were common. More and more users were asking for PBX

systems that can easily migrate to an IP platform.

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