PBX Phone Systems Procurement Category Market Research Report Now Available from IBISWorld

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In the PBX phone systems market, buyers have considerable negotiaton power thanks to declining prices, a wide variety of substitutes, little product specialization, low switching costs and very little price volatility. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has added a report on the procurement of PBX Phone Systems to its growing collection of procurement category market research reports.

IBISWorld procurement market research
Prices are forecast to continue declining due to intense price-based competition and falling input costs.

PBX phone systems have a buyer power score of 4.4 out of 5, reflecting extremely favorable market conditions for buyers. Factors increasing buyer power include recently and forecast declining prices, a wide variety of substitutes, little product specialization, low switching costs and very little price volatility. “Thanks to these factors, the market is in prime condition for buyers to negotiate lower prices on PBX systems,” according to IBISWorld procurement analyst Andrew Krabeepetcharat.

While there is a medium level of market share concentration within the PBX phone systems market, price-based competition is high, primarily due to low-cost foreign competitors. Products are fairly standardized, increasing competition further because products across most brands are comparable and the cost of switching suppliers is very low. “Also contributing to the high degree of competition is the wide variety of substitutes available to buyers,” says Krabeepetcharat. Many companies prefer to use individual landlines for each employee telephone despite higher costs because of a perceived higher quality. Hosted PBX services and free open-source PBX software provide even more alternatives, limiting the large capital expenditure of a PBX purchase. These additional options boost buyer negotiating power.

Slightly declining prices, largely due to falling input costs and price competition, have benefitted buyer power in recent years as suppliers compete to gain market share. Prices are anticipated to continue falling at a slow and steady rate through the next three years with very low price volatility. Low volatility is positive for buyer power because it helps buyers accurately budget for a PBX purchase without risk of price spikes. The only significant detractions from buyer power are the moderate levels of supply chain risk and vendor financial risk associated with PBX systems. This risk primarily stems from the relatively small number of input suppliers, exposing vendors to commodity market price risk. Loss of a supplier could translate to large vendor costs. Low profit margins within the market have spurred significant merger, acquisition and bankruptcy activity in recent years, contributing to higher vendor financial risk and negatively impacting buyers. The top four vendors in the market are Cisco Systems Inc., Avaya Inc., NEC Corporation, and Toshiba.

For more information, visit IBISWorld’s PBX Phone Systems procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of private branch exchange (PBX) phone systems. A PBX system is a telephone switching system that creates a private telephone network within a company. PBX systems allow for the sharing of telephone lines to make outside calls. A PBX automatically routes incoming calls to specific extensions. PBX systems may operate using traditional phone lines or the internet (IP PBX). PBX systems generally include internal and external phone lines and a computer server to manage call switching and routing. This report excludes hosted and open-source PBX services.

Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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