Did Cisco Effectively Sunset the PBX?

Cisco’s purchase of Broadsoft may lead to the imminent death of the Private Branch Exchange, resulting in the advancement of Unified Communications

Sea-change, what sea-change? Many in the industry are calling Cisco’s purchase of Broadsoft late last year the last straw for the Private Branch Exchange (PBX) – your traditional, premise-based business phone system. Based on industry trends, the rise of Unified Communications as a Service (UCaaS) – or cloud telephony – has been imminent.

I am not inclined to declare the death of the PBX… just yet. Don’t forget the fax was supposed to be dead 10 years ago, but lives on just fine in some industries and verticals. There’s a time and place for everything. However, I do see this as the PBXs decrescendo.

Clearly, Blackberry and Blockbuster didn’t see an imminent seachange, but it would appear Cisco does – to the tune of 1.9 billion to be exact. Cisco’s bread and butter telephony solution has been its CallManager on-prem PBX, bundled with a slew of handsets. As of late, they prefer to call it “Unified Communications Manager.”

Cisco Purchases Broadsoft for 1.9 Billion

That’s why Cisco’s purchase of Broadsoft for 1.9 billion is turning heads. Broadsoft is a global market leader in cloud business software for UCaaS. The hardware giant of the universe, Cisco, is now picking off software companies. (See Cisco’s purchase of Viptela in the SD-WAN space as another recent example.) The company line is that Cisco will position Broadsoft for the SMB: “Together, Cisco and BroadSoft will deliver a robust suite of collaboration capabilities across every market segment,” said Rowan Trollope of Cisco’s Applications Business Group. “We believe that our combined offers, from Cisco’s collaboration technology for enterprises to BroadSoft’s suite for small and medium businesses delivered through service providers, will give customers more choice and flexibility.” 

Cisco HCS May Be Next

This all sounds good, but the reality is Broadsoft touts references with 10,000 subscribers or more. That doesn’t sound like SMB to me. Not to mention the fact that there isn’t a month that goes by where we here at ATC are NOT replacing a large, mid-market or enterprise Cisco CallManager. Cisco does have a cloud solution in addition to CallManager, but their Hosted Collaboration Solution (HCS) is not multi-tenant. Therefore, HCS is not nearly as opex-friendly as the multi-tenant Broadsoft solution. Higher end, custom applications will continue to apply for HCS, but many believe HCS is headed for the sunset as well.

Another example is the recent acquisition of ShoreTel by Mitel, for Did Cisco Effectively SUNSET THE PBX? which a major driver was ShoreTel’s Cloud Connect platform. Add on other signs like the bankruptcy of Avaya, one of the last direct descendants of the original equipment business at Ma Bell, and it would appear the writing is on the wall.

UCaaS Delivers

UCaaS providers are clearly meeting the service and business needs of enterprises. We see it every day. The “as a service” platform makes it easier to support, scale and manage. Enhancements are always forthcoming and on demand. The op-ex driven, cloud delivery model is also very attractive. Expect to see UCaaS experience explosive growth and adoption for years to come.

I don’t need an analyst to tell me this, but in case you do: “The UCaaS market is expected to maintain double-digit growth rates throughout the next decade. These are driven by growing customer demand for more flexible technology consumption models to support digital transformation projects. Premises-based communications solutions reaching end-of-life and increasing availability of compelling UCaaS offerings are also encouraging the move to cloud communications,” according to Frost & Sullivan’s 2017 North American Hosted IP Telephony and UCaaS Market Forecast. UCaaS is transitioning from the “early adopter” phase to the “early mainstream” phase for enterprise delivery, and dare we say represents a “sea-change” for Unified Communications (UC).

Louie Hollmeyer is the director of marketing at Advanced Technology Consulting (ATC), a firm specializing in telecom expertise and next-gen IT technologies. He can be reached at 513-323-1131 or at louie@4atc.com.