Good Things Come in Small Packages

Posted: 10/2003

Good Things Come in Small Packages
IP PBX Vendors Scale Products, Partner Programs to Serve SMBs
By Tara Seals

Though small and medium-sized businesses long have wanted to capitalize on the savings and convergence benefits that come with using IP PBXs and voice over IP, the pricey systems have remained out of their reach. Lately, however, thats changing as suppliers have debuted affordable, turnkey options with high return on investment for the SMB market  and theyre turning to channel partners to get the word out.

An IP PBX solution allows users to simplify network management by combining voice and data infrastructure. It also eliminates long-distance toll charges between the main office and any branch, remote or home office where IP telephones are used, and reduces long-distance charges for other calls by allowing voice and fax calls to be transmitted via the Internet or the companys private Intranet. Using VoIP also allows application sharing across office locations, helping the user to enhance both cost-effectiveness and customer service.

For instance, Mockingbird Networks says customers can save as much as 60 percent on their voice costs by using its new product line, ViPs, a complete VoIP communications system for SMBs. ViPs Vphone, or virtual phone system, provides flexibility for the mobile and virtual workforce. SOHO, telecommuters and mobile workers can be reached anywhere by dialing their office phones, eliminating having to search for someone by dialing several numbers. Savings are achieved by routing intracompany phone calls over the companys existing Internet connection, by routing long-distance and international calls over the Internet to the office closest to the called destination and by allowing mobile workers or telecommuters to use cell phones, IP phones or soft phone on laptops and PDAs to hop on the company phone network for long-distance and international calls instead of using the PSTN.

Mockingbird Networks solution is more like a Volkswagen than a Cadillac, says CEO Pong Lim,, in order to target companies with smaller budgets or greater demands for ROI  two barriers to adoption of traditional rip-and-replace solutions. A 25-user system runs $10,000 plus a one-time licensing fee per end user based on system configuration and selected options. Additional systems can be daisy-chained to accommodate larger user bases. Volume discounts apply.

The ROI message is gaining appreciation. A report published by DellOro Group shows line shipments of IP PBXs increased by 17 percent in the second quarter of this year, to 1.8 million lines. While the overall market for enterprise voice communications systems remained flat again this quarter, IP PBXs continue to be the growing segment of the market. IP PBXs also continue to be the most popular option for operating IP telephones over corporate data networks with two thirds of IP lines shipping on these systems. Specifically, IP PBX models that sell to SMBs grew a notable 6 percent.

Rather than simply offering a scaled down, cheaper version of their larger IP PBX offerings, vendors that see the opportunity are tailoring solutions to the special needs of smaller firms. For instance, Toshibas Telecommunication Systems Division (Toshiba TSD) has launched the Strata CTX100-S digital business telephone system, which provides smaller system users with a turnkey telecommunication system that supports up to 16 ports in a mix-and-match configuration of central office lines, IP, digital and analog stations. That means businesses dont have to do a forklift replacement of existing systems, but rather can migrate to IP as needed. System pricing ranges from $210 to $460 per station, depending upon system configuration, options and telephone models selected, and it is being sold through Toshiba dealers.

From a telecom equipment viewpoint, the smaller business segment has long been an overlooked market, says Michael Durance, vice president and general manager of Toshiba TSD. In fact, most telecom equipment manufacturers have considered it as a disposable market and have treated it as such, delivering low-quality, low-featured systems that sold solely on price and have no ability to grow with the company, increase capacity, or even last very long.

We at Toshiba see the market very differently, he adds. This is a sophisticated, demanding market with great potential, and we seem to be alone in this viewpoint. To be certain, there has long been inexpensive telephone systems priced to suit this market, but they were sorely lacking in the features and quality that users wanted.

In contrast, the Strata CTX100-S when combined with Toshibas Stratagy IVP8 Voice Processing gives small companies voice mail, auto attendant and call management capabilities, such as recording a call directly to a users personal mailbox, which help small enterprises improve their bottom line by ensuring that their employees dont miss calls, messages or opportunities. Toshibas Stratagy IVP8 automated attendant answers and routes incoming calls around the clock.

Companies today want telephone systems that help present themselves as bigger than they are, says Durance. For example, they want to have extension number designations in the hundreds, not just one through nine; they want auto attendants; they want the ability to add IP; they want to be able to network their system with another office or home office; and they want voice processing capabilities like the big companies have. They want quality, reliability and a system that will grow with them, not something they have to throw away and start all over. They essentially want all the same features as the big company telecom systems, but in a product that is sized and priced right for them.

Zultys Technologies has released the MX250 enterprise media exchange, a single box that targets small firms with five to 250 users and that want to provide voice, data, fax and video communications for their employees. Subsequent to customer feedback from the introduction of the larger MX1200 media exchange in January, Zultys accelerated development on the MX250 for the SMB and branch-office market.

The release of the MX250 continues our commitment to produce highly integrated products which are based on open standards, says Iain Milnes, president of Zultys. The MX250 makes it economical for a large corporation to deploy in multiple sites and a small corporation to deploy in a single site.

The MX250 provides VPN capability, connecting remote users over the Internet with the same access to features and functions available in the office. Sites also can be connected over a WAN, providing integration and toll bypass. Speech compression is incorporated into the MX250 to reduce the bandwidth required by remote users or WAN interconnectivity. It also incorporates Internet and PSTN gateways, voice mail, automated attendants, ACD groups and firewall, in one 2U box that is managed from a single administrative graphic user interface (GUI). The GUI features include presence, chat, instant messaging and advanced call handling rules.

Retail pricing for an MX250 starts at $5,000. Software licenses can be purchased that add users and features to the system. For example, a system for 250 users costs $44,000. The system is available through VARs and solution providers.

Competing systems that serve smaller enterprises typically reduce the feature set of the systems for them to be economically feasible, says Greg Still of Xiologix LLC, a provider of advanced networking solutions. With the MX250, Zultys is making all the features of higher-end systems available for smaller sites and adding capabilities that meet their specific needs. This approach allows companies of all sizes to realize a high ROI by moving away from legacy systems.

Applications hosting firm OuterBounds Technologies Inc. has announced nVox, an IP telephony suite available through resellers. The first product available in the nVox family is the IP softswitch private branch exchange (SPBX). We view the nVox IP SPBX solution as the flagship voice product for small to medium-size businesses, which will allow them to effectively manage their telephony requirements, says Hans Beha, OuterBounds co-chairman and CEO.

The company says the product is the foundation for a converged telephony solution for businesses to reduce costs and improve productivity. End users can manage all nVox capabilities via their own PCs, with a thin client interface. Users can personalize call features and administrators can make moves and changes remotely without having the traditional equipment shuffling or demand for on-site resources. Features include: voice mail; message handling customization; automated attendant; automatic call distribution; call scheduling and conferencing; flexibility in adding lines, phones and options.

Utilization of the nVox IP PBX will allow us to maximize the value of each dollar spent by removing the need for upfront capital, providing greater functionality and lowering monthly expenses, says Steve Kostyshen, chairman and CEO of OuterBounds client Mobiam. The nVox IP PBX will consolidate between three and five vendor relationships and provide a dramatically better, more cost-effective solution than going the traditional PBX route.

To help get the word out, vendors are creating channel strategies. Avaya Inc. and Hewlett-Packard Co., for instance, have announced a joint marketing agreement to bring their IP products for voice and data to SMBs, and they specifically built a common channel to distribute the bundled communications solutions. Distributors and VARs from both companies programs, including VARs that are partners in the Avaya Accelerated Sales Authorized Program, have been tapped for the mission. Later this year, Avaya and HP intend to expand the common channel to make this solution available worldwide.

The offer bundles Avayas IP Office solution, a telephony and data server for SMBs that supports two to 256 users with HP ProLiant servers. The bundle can host a range of applications available for the Avaya system, from voice mail to contact center software. Built on Avayas converged voice and data technology, Avaya IP Office can function as an IP or circuit-switched PBX and can support integrated contact centers and other communication applications.

This integrated IP telephony solution gives SMB customers a value-priced way to adopt IP and gain the bottomline benefits that it offers, says Laurie McCabe, vice president at Summit Strategies. It also provides value-added resellers an excellent opportunity to enter and drive growth in the SMB market.

To raise partner profits further, the IP Office is packaged with customized installation and maintenance services targeted to IP solutions provided by Avaya Global Services and Avayas BusinessPartners. Avaya Global Services and Avayas BusinessPartners can determine if customer networks are ready for IP functionality by offering comprehensive professional services using tools designed for IP telephony.

Lim says Mockingbird Networks recently rolled out its channel strategy. He says the company targets systems integrators, VARs and interconnects, offering a margin-based program with wholesale discounts of more than 50 percent.

Vendors say these smaller, turnkey systems for SMBs may benefit resellers as much as they benefit the intended customers.

Configuration and deployment time of the MX250 is minimal for a certified Zultys reseller, says Zultys Vice President of Sales David Gibbs, adding, Zultys resellers offer MX250 remote administration and system monitoring for organizations that wish to outsource technical services and boost recurring revenue.