A History of Self-Destruction in the Telco Business

In recent years we have seen several providers struggling financially or even closing up shop. Starting with Nortel, then Avaya, next Toshiba Telecom. These were all industry giants with successful products. What went wrong?

Certainly the issues were complex and there were many contributing factors that we will not discuss today. But one overriding point catches our attention as a vendor:

The failure to adjust to meet contemporary market demands.

Innovation is everything. There is no doubt that our industry has embraced The Cloud, SaaS, and other software- and Internet-based technologies with vigor and certitude. The Cloud PBX market is growing at an Compound Annual Growth Rate of 14.9%. The UCaaS market at a rate of 25-30%.

This leaves providers with two choices: adjust to meet demand or get left behind.

telco-trends

Nortel

Nortel was one of the best in the world of telephony; an industry giant. Nortel on-premise systems were well built and long-lasting. The quality of their product is not in question. However with the emergence of the Cloud, the industry as a whole began to evolve. Consumers no longer wanted expensive hardware and physical telephone systems. The advantages of VoIP, the Cloud, and other modern software-based technologies are simply too enticing.

While Nortel did make the initial transition from PBX to IP-PBX and even developed a Business Communications Manager (BCM 50), that was as far as they went in evolving to meet customer demand.

Sadly it was not enough and well, we all know what happened next.

Read our other posts about what happened to Nortel. 

Avaya

Avaya, another industry giant with a solid product, came to the rescue and bought out Nortel. However their success quickly turned to a Chapter 11 bankruptcy. Their mistake was similar to that of Nortel – a failure to evolve with current trends.

The Wall Street Journal puts it best:

“Avaya illustrates the potential pitfalls of buying big, established technology companies at a time of near-constant innovation. Private-equity firms often use borrowed money, or leverage, to buy a company with the hopes of juicing their gains on an eventual sale of the investment. But if economic conditions worsen or the competitive landscape changes, the buyout debt can become difficult to manage.” (Wall Street Journal)

Avaya’s corporate telephone systems worked great and scooping up what was left of Nortel only strengthened their offering, but when VoIP and other internet-based services hit the market the competition became overwhelming.

“The [Avaya] bankruptcy underscores the challenges telecommunications companies face as they transition to software and services from hardware” (Retuers)

Toshiba Telecom

Along the same lines as Nortel and Avaya, we can all agree that Toshiba’s telecom products were stable and functional. The issue has never been about the products themselves, but rather their failure to adjust according to market demand.

To be fair, Toshiba did make attempts to evolve with the industry, but unfortunately it was too late. By the time Toshiba released an IP product, the cloud was already beginning to trend. Despite their best efforts, it was just too late to catch up.

Read more in our blog post What Happened to Toshiba Telecom?

We keep seeing this pattern of legacy and on-premise providers either shutting down, going through financial trouble, or ultimately doing a major overhaul and switching to the cloud.

But our concern goes beyond that. These companies failed because they were not prepared to adjust as soon as the cloud hit the market. So the question is – what is next?

Everyone is abuzz about the cloud, but technology is certainly not going to stop innovating now. The cloud is the top technology of today – what about tomorrow?

Success in this industry is dependent on the ability to anticipate future trends and adopt them as soon as – or before – they hit the market.

What about your provider? Do they offer the latest trends? Do they have a plan for the future?

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7 Reasons You & Your Customers Should Switch to Hosted

hosted pbxTransitioning to a hosted model will enable you to sell more, earn more, and enter the future with peace-of-mind.

And you will not be alone – the value of the global Hosted PBX is expected to double from $4.73 billion in 2018 to $9.5 billion by 2023.

7 Reasons You & Your Customers Should Switch to Hosted will take you through the top seven benefits of a Hosted PBX for both you and your customers including more sales, more profits, and a secure future.

Is Avaya the new Nortel?

avayaEveryone is talking about the Avaya Bankruptcy and what it means for the future. No Jitter had a very interesting piece on the bankruptcy that we thought was worth sharing: Avaya Bankruptcy: Good or Bad for Customers?

The author, Phil Edholm, believes that the speed of the bankruptcy process is of great importance. He compares the bankruptcies of Nortel, which was a long and painful process, and that of Aspect, who reached a much quicker conclusion.

Edholm explains that “Chapter 11 is designed to enable continued operations and return to normal business (versus the total liquidation of Chapter 7), creditors have claims to all of a company’s assets and cash. Those claims can prolong the bankruptcy process, and often lead to liquidation, which is what happened in the Nortel case.”

On the other hand, Aspect was able to avoid this by securing the support of creditors and developing a plan before filing.

Reports from Avaya indicate that they do not have a plan and are only beginning the process of negotiations.

With the outlook looking so uncertain, this seems to distract from the essential issue – why did they get into this position in the first place?

More posts like this one:

Still have a Nortel System?

If your company still has a Nortel system such as the Meridian or the B200, it is long overdue for an upgrade. With Nortel out of the picture and Avaya’s future looking uncertain, now is the time to take your company forward with a new telephony system.

Whether you are hesitant to leave behind your pricey PBX or anxious to try something new, moving to a VoIP system will have a positive impact on any company or organization.

Nortel systems were well built and long lasting, but the world of telephony has evolved into something entirely new and different. Gone are the days of expensive hardware and physical telephony systems. VoIP, based on software and data, boasts many advantages.

From increased productivity to economic savings, VoIP will not disappoint. Ready to get started? Sign up for a free account and take the first step beyond Nortel.

Additional Reading:

Five Reasons to Upgrade from Nortel to PBXware Key System

nortelAre you a Nortel customer trying to decide where to go next? Are you faced with more options than ever before and unsure which is the best after leaving Nortel Networks and BCM 50? Have you considered PBXware Key System?

PBXware Key System is the logical next step after Nortel, also known as Nortel Norstar or Meridian Phone Systems, for several reasons…

1. Fast & Easy Set-Up
Migrating to a new telephony system is difficult enough without the added-in stress of a lengthy installation and steep learning curve. PBXware Key System boasts the fastest phone system set-up on the market.

2. VoIP Telephony
The telephony market has been inundated with VoIP offerings in recent years. With more features, bigger sales, and less costs, most telephony companies have already made the move to VoIP. It is not a passing trend, VoIP is the telephony of the future and of today.

3. Account Managers
Bicom Systems PBXware Key System goes above and beyond the features and capabilities you would expect by giving you an experienced Account Manager that is prepared to walk you through the transition and even beyond. Rest assured that your Account Manager will understand your business and ensure you receive the best possible system and support available.

4. Unified Communications
PBXware Key System is part of a turnkey Unified Communications system that will make communicating easier, faster, and more efficient for your company. Our software trio and additional desktop and mobile applications give users flexibility and constant connectivity. Simplify your telephony migration by switching to a company that can offer you everything from the same place.

5. Extensive Features
One of the most impressive aspects of PBXware Key System is its extensive feature-set. Make this telephony upgrade worth it by increasing employee productivity and efficiency through useful telephony features.

Additional Reading:

Or talk to an experienced Account Manager by emailing sales@bicomsystems.com

How to Choose a New Provider after Nortel

nortelAre you ready to move on from Nortel and BCM 50 but unsure how to choose a new provider? Life After Nortel: SMB Migration Roadmap and Buying Decision Checklist from Ziff Davis provides five guidelines to keep in mind as you compare providers after leaving Nortel Networks (also known as Nortel Norstar or Meridian Phone Systems):

1. VoIP Pedigree
The VoIP market is full of newcomers with offers that will dazzle and impress. Be cautious and look for an experienced company that has a long and positive track record. Read case studies and ask for references.

2. Core Business
Most telephony companies have more than once focus; look for a company that is committed to phone systems and that shares your outlook on telephony. Find a company that will innovate and progress but continue offering what you need.

3. Range of Features
As you dive into the world of VoIP for the first time do some research on the options and features available. You are going to want to stay with the same telephony provider for a long time, so make sure they have everything you need and want.

4. Customer Base
Does the provider usually serve large enterprises? SMBS? Is there niche a specific industry like hospitality, medical, or government? Seek a provider with customers similar to your own company so that they will understand your business needs and obstacles.

5. Viability
This is going to be a big move – go with a provider that will be around for many years to come. Ask about the provider’s financial situation and their plan for the next several years. Pay attention to how the company is doing and choose one that appears to be viable in the world of ever-changing technology.

Ready to get started? Talk to one of our experienced Account Managers about upgrading to PBXware today! With a fast & easy setup, PBXware encompasses the most advanced technologies and unified communications features along with an understanding Account Manager to help you with the transition and beyond. Just email us at sales@bicomsystems.com today!

Additional Reading:

What Happened to Nortel?

How to Move On From Nortel

Five Reasons to Upgrade from Nortel to PBXware KeySystem

Life After Nortel: SMB Migration Roadmap and Buying Decision Checklist by Ziff Davis.

There’s Life After Your Nortel PBX from VoIP News

Or talk to an experienced Account Manager by emailing sales@bicomsystems.com