The baggage of first generation success is that the best thing for your existing business is to resist the customer migration to new technologies.

Legacy PBX manufacturers are doomed.

They have been gorging enterprise customers for years, offering relatively low value at great expense. How have they done this?

Packet and Circuit offer competing paradigms for business needs. Circuit is easier to execute for real-time communications between people and have been the model for human-to-human communications for over 100 years. That is going to change. Big time.

Packet is more efficient and better suited to delivering satisfactory communications between computers, which can tolerate packet discards, duplicates and packets arriving out of sequence. But, when the telephones are computers too (yes, IP phones do have a processor), the industry can deliver substantial functionality emulating PBXes. Data networks have overcome many of the challenges of handling real-time human-to-human communication in a quality way, there are great opportunities to tell the story.

2005, according to an amalgam of four industry analysts, is the year that the IP-PBX product category (first invented by 3Com – NBX), will ship more IP telephony lines than digital telephony lines in the United States.

An amazing industry progression too. 1999 offered the equipment industry the 'perfect storm.' Telecom deregulation, dot-com and Y2K coincided in a harmonic convergence the industry has never seen and will never likely see again. The data networking products in those years did not have Power over Ethernet (PoE). They did not have Quality of Service (QoS) packet prioritization features that have become the fundamental features of modern VoIP implementations.

That gear is 5 years old next year. PBXes bought in 1998 are 7 years old. It's time to replace. Although up to now research will support the 'hybrid' strategies of those burdened with installed base, I believe that that will change.

New applications will make hybrid seem like exactly the wrong answer. Once customers realize that they've been had, they'll be upset with manufacturers who are perennially late, slow and over-priced.

PBX vendors are caught between a rock and a hard place. Their financial performance will never be healthier than it is today (which is not very healthy – Nortel is in financial disarray and Lucent's prospects are unpleasant). The baggage of supporting legacy, managing transition to new technologies and winning new customers will not be an advantage for them. In fact, their relationship with carriers will slow them down too, distracting precious R&D resources and encouraging network buildouts and upgrades that may never pay off.

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