March 16, 2021 Rohit

Panasonic to close PBX and Biz Comms arm

As Panasonic announces its exit from PBX industry, let us take a closer look at the impact on their customers, partners and the market.

You may have heard the saying, “Bigger isn’t always Better“.

This is proving to be particularly true in the present day context of PBX and Business Communications industry, where big brands have been seen exiting. While Big Brand is great value, and takes years to build, Big Brand also means Bigger spends, which in turn means that inertia to a shifting market will be catastrophic for that business.

Looking back not so long ago, in 2017, Samsung had stepped away from the PBX industry. In 2018, Toshiba threw in the towel, and in Dec 2020, Panasonic announced that it would exit from the on-premise PBX and Business Communications market by 2022.

This is not a new phenomenon. We have seen this happen in other industries too, almost cyclically. For example, in Mobile & Smartphones industry, Nokia and Motorola, who were once the largest grossers, are insignificant today.

Decrypting what this means for Customers

Every business that exits a market causes some chaos in the industry and in the ecosystem of its partners and customers. Customers who have invested in Panasonic PBX systems or in the process of deciding to, may need to reconsider options, in fact for the good. Partners on the other hand have a bigger challenge to skill up their support and sales team to be able to market and sell other makes and models of products to hedge their bets, again, for the good since this should be seen as an opportunity to embrace better-connected portfolio of products that Panasonic products, which are largely proprietary, grossly lacked.

Proprietary approach will neither work for customers nor for the makers of UC solutions and their partners.

It is however sad to see an industry-pioneer like Panasonic exit the PBX market after having served it as a leader for several decades. From the competitive wins made by Crux over past 3 years, it does seem that Panasonic was perhaps the most popular PBX brand amongst SMEs, hence a popular model like KX-824 had become synonymous to PBX for SMEs. However, it is important to understand why Panasonic chose to give up its pole position and exit the market, citing its PBX business as “untenable”.

From announcement email to Panasonic partners

It is with great sorrow that we close our business, especially one that has decades of history and trust.

Carlos Osuna, Head of Business Communications BU, Panasonic

PBX business was untenable for Panasonic

Enterprise telephony market demand has been shifting from traditional voice systems to all-integrated Unified Communications (UC) platforms, offering an omni-channel presence. Yet, many large brands, including Panasonic, continue to serve the enterprise audience with expensive on-premise IP-based solutions, sans the UC features. In fact, it seems that they didn’t even try to develop a UC roadmap to get close to market direction, thereby lagging behind by leaps and bounds in capabilities from SaaS-based competition.

Market directive is clear and unforgiving – Innovate or Perish

On the other hand, these large brands also refuse to serve the SME market, which is more than half the Total Addressable Market (TAM), by maintaining premium pricing for their IP-based products and continue to position and sell archaic analog products to SMEs that work with PSTN and ISDN lines, which, as many in the telecom field may know, are fast retiring. Many telecom operators across the globe, including British Telecom (BT) have announced that ISDN and PSTN lines are being retired to make way for SIP trunks on fiber by year 2025.

(Click here to read about the benefits of SIP trunks and gain familiarity)

As a result, both market segments, Enterprise and SME, slid away from Panasonic. Enterprise slid away as the portfolio was not meeting their growing need for UC capabilities and inter-operability, and SMEs slid away since their IP-based portfolio was too expensive for them and the analog portfolio being offered to them could no longer meet their business needs.

And, as luck (or lets say, bad luck) would have it, Covid-19 pandemic ended up being that precipitating factor that was the last straw. The rapid shift to cloud-based collaboration and UCaaS platforms (with Google Meet, Zoom, MS Teams, Alcatel Rainbow, etc.) gaining popularity and adoption in 2020, just eroded Panasonic’s position and PBX business, making it untenable.

SMEs want an affordable and easy to use UC

Big bang exits from PBX & UC industry does not mean that the opportunity ceases to exist. UC space is expected to grow from approximately $40billion at present, to over $95billion by 2023. This is corroborated by reality around us surrounding WFH and other changes happening at a pace like never before. In fact, in the SME space, and I re-iterate that it is half the TAM, we have seen in 2020 during the pandemic that lack of business continuity planning and lack of collaboration capabilities took the SME businesses by surprise and were unprepared for a WFH environment. This has caused a mindset change with an acceptance towards WFH which is going to propel UC adoption by SME!

Cloud-based solutions offer convenience, not cost savings! In the long run, Total Cost of Ownership (TCO) of a SaaS solution is several times the TCO of an on-premise solution.

Crux popularity is on the rise amongst SMEs

At Crux Labs, we have identified the need for an affordable UC by SME, much ahead of the curve, in 2017 when we started. No business today can survive with just a PBX and SME business owners are better informed about this reality than before. They require remote-readiness, business continuity, omni-channel presence, low-cost yet fully functional UC that offers integration with CRM and other platforms, REST API integration, open systems, etc. They continue to be wary of monthly per-user costs and prefer an easy to manage solution that does not drill a hole in their pocket. A need that a Panasonic or a Cisco can never fulfill. A proprietary and closed innovation approach will not work in current day world that is knitted around inter-operability, Zapier interconnects and technology that speaks with each other.

In a market and year in which Panasonic announced their exit, Crux Labs posted 55% growth year-over-year with a positive cashflow.

Today Crux is used by over 10,000 users across 11 countries. We and our partners deliver, setup and manage Crux deployments completely remotely and help SMEs run their business operations from offices and homes.

Through this model, in the past few months, we have added many traditional businesses who had until now been buying and using analog solutions only like stationary and stamp manufacturers, stock brokers, fashion and retail outlets, schools, clinics, to name a few. We have successfully moved them to Crux and SIP trunks, saving them monthly costs while having a positive impact on their business.

One such example has been set by our customer that is also a well-known and well-respected SME brand in Singapore, FarEastFlora.com. The example has been quoted by SGTech in an interview, by leaders in corporate forums and recently by The Business Times.

This is the new normal for UC and its adoption by SMEs.

For Panasonic Users

For Panasonic Users

If you are using a Panasonic PBX or considering buying one for your office or call centre, feel free to schedule a call with our experts to receive a complimentary assessment for your needs and considerations.

For Panasonic Partners

For Panasonic Partners

If you are a Panasonic channel partner, reseller or distributor, and looking for a high-value and low-cost PBX and UC alternative that is here to stay, feel free to explore our Partner Program and get in touch.

Things you must know about SIP trunks

Most folks are familiar with traditionally used phone lines that are better known as Analog line / Fixed line / Land line / POTS / PSTN / ISDN / PRI / BRI / DEL / PhoneNet, etc. But, not many are familiar with SIP Trunks that are the new-age digital phone lines.

SIP Trunks are,

  • Truly Digital – as it is IP-based hence does not require separate cabling in offices for phone system and LAN, saving expensive infrastructure costs.
  • Secure – because as compared to ISDN or PSTN lines, SIP Trunks are not so easy to tap and snoop, and can be further tightened with encryption, TLS and SRTP capable PBX equipment.
  • On-Demand Scalability – those familiar with PSTN and ISDN would know that those are single-channel or fixed-channel technologies, where as SIP Trunks are easy to scale up/down and allow customers to chose the desired capacity.
  • Cheaper than ISDN or PSTN – since if your business requires a concurrency of only 2 simultaneous calls, then you should be able to subscribe to only 2-channels as against ISDN that requires businesses to subscribe to 30-channels per force.

Businesses that are presently using ISDN lines or using 3 or more PSTN lines, can reduce monthly phone bills by up to 80% by moving to SIP Trunks along with a cost-effective small business phone system like Crux, that doubles up as a UC platform. It is perhaps the easiest way for SMEs to embark on UC journey and start using communications effectively towards increasing productivity and sales, while lowering the business communications costs.

In Singapore, though no formal announcements have been made yet on the PSTN/ISDN retirement, the change is being effected informally. For example, Funan Center was recently renovated. In its new avatar, Funan does not offer any copper based telephony. One can only use fiber. Hence, new tenants can subscribe to SIP trunks instead of PSTN or ISDN lines, and take advantage of the new technology that is cheaper-better-faster.

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