Abstract: Virtual PBX, or virtual phone systems, have been on the rise since the recent push to move your business to the cloud, although now some of the industry leaders are entering the field making small business telecommunications faster, cheaper and more accessible. Find out who and how this could affect your small business telecommunications.

The emergence of the virtual PBX industry in the small business world shouldn’t be much of a surprise. In the recent years, there has been a tremendous push toward cloud-based storage and services. Spearheaded by major companies like Google and Apple, technological services are moving up into the cloud. Cloud-based services offer convenience of easy retrieval from anywhere as well as increased ability to share and collaborate. We have seen major gains in online storage with Google Drive and Dropbox, music with Google Music and iTunes Match, and even the traditional fax machine is being phased out by online fax.  It makes sense that traditional landlines are threatened as well.

Thus far however, that has not been the case; at least at the enterprise level. According to Dan Bieler, an analyst at Forrester (a global research and advisory firm headquartered in Cambridge, Massachusetts), only about 1 out of 10 businesses use cloud-based communications. Indeed, cloud-based voice has been much slower to gain ground when compared to other types of technology. Firstly, conventional voice services are getting cheaper by the day, and secondly, moving to a virtual PBX is simply just not that high on the priority list for many organizations at the moment. Bieler stresses that virtual PBX must have a differentiating feature that makes enterprises worthwhile to switch to them, and he believes that may lie on mobile device management. Services that take advantage of mobile phones and tablets that all company employees already have would force enterprises to give virtual PBX more serious attention. Vendors are aware of this and are already working on expanding their mobile device integration.

The fact that the virtual PBX industry is considered to be on a slow growth path despite seeing a 4% sales increase during the first quarter of 2012 might be a testament to how lucrative analysts think the industry can become. j2 Global Communications, the company that runs eVoice, saw its highest revenues ever in Q4 of 2011, exceeding the previous years by 20% or $14 million. Much of the gains can be attributed to its voice services which is one of the fastest growing parts of j2’s business domestically. Telecommunications giant Comcast has entered the market as well, launching a cloud-based voice and unified communications solution called Business VoiceEdge. It expects to make the service available nationwide by the end of 2012.

Moreover, virtual PBX is seeing strong international growth.

  • In the Caribbean and Latin region, sales grew 18% in the first quarter of 2012 from first quarter 2011
  • In Asia Pacific, PBX increased by 16% in first quarter of 2012 versus the last fiscal year in 2011.
  • In Canada, telecommunications company Fibernetics is heavily pushing their new NEWT service complete with virtual PBX functionality. It promises a 50-80% savings for businesses.
  • Oxford University in the UK recently switched to virtual PBX, and has raved about its fantastic call quality.
  • There have also been gains in Africa, with vendors offering virtual PBX for the first time in the country of Ghana.
  • In addition to this, the South African company Vox Telecom Group introducing a very ambitious and comprehensive communications solution to businesses called Verto Connect.

While Virtual PBX may have been slow to develop thus far, signs show that the industry has a lot of prospects for growth in both domestic and international markets. Vendors are increasingly more aware of what businesses want and are working to provide those features to them. With cloud-based services phasing out traditional technologies elsewhere, telephone service may not be far behind.