Prices are expected to rise slowly during the three years to 2014 as a result of growing demand for hosted PBX services, increasing wage costs and advertising costs
Los Angeles, CA (PRWEB) September 22, 2014
Hosted PBX services have a buyer power score of 4.1 out of 5, reflecting highly favorable market conditions for buyers. Buyers benefit from factors such as a high availability of substitutes, a high level of competition among suppliers and low supply chain risk.
“There are many substitutes for hosted PBX services, providing buyers with more options and boosting buyer negotiating power. Substitutes such as on-premise PBX, open-source PBX and landline telephone systems allow buyers to leverage these alternatives when negotiating pricing and conditions,” according to IBISWorld business research analyst Andrew Krabeepetcharat.
Strong competition, meanwhile, has made it difficult for any one supplier to command a significant portion of the market, leading to a low level of market share concentration among hosted PBX service suppliers. This competition has mitigated price growth for the services and provided buyers with more leverage in price negotiations. High profit levels are being driven by increased demand for hosted PBX services. Demand growth and fewer barriers to entry have caused the market to flood with new suppliers. Most suppliers are small and do not have the resources to service a significant portion of the market. Almost 75.0% of suppliers have less than 20 employees. Suppliers are also limited by their ability to purchase advertising, network equipment and labor, all of which are necessary to capture and support new clients. The top four suppliers of these services are J2 Global Inc., 8x8 Inc., Shoretel and Ringcentral Inc. J2 Global Inc. and 8x8 Inc. are both telecommunication solution providers, while Shoretel and Ringcentral Inc. are hosted PBX specialists.
“Furthermore, supply chain risks are low in the market, which benefits buyers in that it is unlikely that any drastic spike in upstream costs will occur,” says Krabeepetcharat. These low supply chain risks have given way to low price volatility, allowing buyers to more accurately predict future spending without the risk of sudden price hikes.
However, buyer power is weakened by rising demand for hosted PBX services. The number of broadband connections and mobile internet connections has been growing aggressively in the past three years, meaning that more businesses now have an incentive to purchase hosted PBX services. In response to this growing demand, suppliers have been prompted to raise prices. For more information, visit IBISWorld’s Hosted PBX Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of hosted private branch exchange (PBX) services, also known as virtual or cloud PBX services. A hosted PBX service provider operates and maintains an entire office telecommunications system remotely using voice-over-internet protocol (VoIP) technology, which allows users to make calls over the internet. Services primarily involve call management but can also include functions such as call recording and an automated call-routing attendant, or auto attendant. Buyers are small to medium firms or companies that have mobile employees (e.g. real estate firms and consulting firms). Suppliers are telecommunication solution providers and hosted PBX specialists. This report does not include on-premise PBX, open-source PBX, video or audio conferencing.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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.