Segment Analysis: KTS-EPABX

The market continued its steady growth. And the prices kept dropping.

T he EPABX market can be divided into two segments–the

volumes market and the high-end, value-driven market. While the first treats PBX

as a mere calls-transfer device with no urge to use its other capabilities, the

latter looks at it as a convergence device–the centre of all voice, data, and

video traffic in an enterprise. The former market is dominated by a host of

small indigenous players (both in the organized and unorganized sectors)

manufacturing a host of low-cost systems,



the latter by technology-driven big and multinational companies. Interestingly,
the year 1999 also saw EPABX companies



identifying homes as an important market segment.

Market Size

The EPABX market more or less grew around expected lines

during 1999-00. Valued at around Rs 310 crores, it grew by 19.23 percent over

the 1998-99 figures of Rs 260 crores. In terms of number of lines, about seven

lakh ports were sold during this period covering all the segments.

50 percent of the market is dominated by low-end PBX systems.

The middle-end products account for 20 percent of the market, while high-end

PBXs have a 30 percent share. This means that if the size of the market is taken

to be seven lakh lines, then low-end would be 3,50,000, middle-end would be

1,40,000 and upper-end would be 2,10,000.

However, in terms of value, the high-end EPABXs accounted for

45 percent of the market netting Rs 140 crore. The low-end market did a business

of Rs 58 crore ( 19 percent), while the medium-end was valued at Rs 112 crore

(36 percent)

The market size of KTS last year was estimated to be around

Rs 140 crore, a 25 percent growth over the 1998-99 figures of Rs 112 crore. In

terms of numbers this accounted for some 1.3 lakh units. The per unit price of

these systems ranged from



Rs 10,000 to Rs 15,000.

Prices

The average price per port fell by 10-12  percent during

1999-00. There was nothing unusual about this as prices have been



coming down since 1995 owing to intense competition and lowering of import
duties on EPABXs. However, the prices of high-end PBXs have more or less

stabilized and in cases have even shown an upward trend. This is because vendors

have been constantly adding new and more advanced features to these systems.

Drivers

• The urge and demand for more switches in enterprises for
  
  customer support services.

• The addition of 45.4 lakh DELs by DoT and 3.76 lines by
  
  MTNL.

• The net switching capacity increased by 69.95 lakh
  
  (including MTNL’s 4.15 lakh) lines.

• Spread of ISDN connections to new areas and the entry of
  
  fixed service providers like Bharti Telnet, Hughes Ispat (name changed to
  
  Hughes Tele.Com) and Tata Teleservices.

• The growth in the IT and IT-enabled services (an
  
  estimated 30 percent).

• Increase in both captive and third party call centre
  
  business (around 40 percent).

• The ISP segment.

Trends

Convergence was the buzzword in the high-end enterprise

market. Even as switches became IP-enabled, EPABX systems were positioned as the

centre of all types of communications in the enterprise. However, there remained

a wide gap between the availability of this converged technology and its actual

application. For the majority they remained voice switches. A major portion (70

percent) of the market remained biased towards pure voice switches.

Expansion of ISDN network in the country was a boon to

digital systems. Digital Enhanced Cordless Telecommunications (DECT) was

identified as a promising technology and one of the significant market



drivers.

The Indian customers are not yet ready to invest in systems

with fancy or high-end features. They still look for switches for their basic

voice switching needs and are not swayed by expensive voice-data-video carrier

switches. They are vigilant enough to acknowledge the rapidly changing nature of

technology. VoIP/ADSL/DECT would be sought after features once these are

supported by a more efficient and powerful telecom backbone in the country.

While Tata Telecom leads the high-end of the market, the lower-end is

dominated by a number of small players like Accord, Lucky, Gold Star, Matrix,

and Syntel.



Other significant players in the PBX market were Nortel, Lucent, BPL, Alcatel,
and Usha Informatics. Enkay and National Panasonic were the significant players



in the KTS segment followed by BPL, Nortel, Samsung, Siemens, LG, and Tata
Telecom.