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.



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, 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?

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.

What Happened to Toshiba Telecom?

toshiba telecomOn March 21 Brian Metherell, VP of Toshiba, announced in a letter that the Toshiba Telecom System Division was shutting down. Dealers have until May 22 to place any final orders before the doors close for good. Warranties and contracts will be honored, but those are finite and will reach an end. Long story short: Toshiba phone dealers have some big decisions to make, and sooner rather than later.

What Happened to Toshiba?

But first, what happened to Toshiba? The news came as a shock to many. Sure, their financial struggles were no secret and the Avaya bankruptcy a few months ago had opened many eyes to industry changes, but still, this is Toshiba. The truth is many industry experts were anticipating this news. Toshiba made a few irreversible mistakes that sealed their fate years ago.

In the wake of Toshiba’s announcement, the telecommunications world is abuzz with talk of the cloud. But to really understand Toshiba’s demise, we have to go back even further to the advent of IP. We can all agree that Toshiba’s telecom products were stable and functional. The issue has never been with the products themselves, but rather with the timing. When IP technology began to permeate the market in the early 2000s, Toshiba developers may have taken note and even set out creating an IP product, but they took too long. IPEdge hit the market a full ten years too late in 2011.

Enter: The Cloud. By the time Toshiba caught up and released an IP product, the cloud was already beginning to trend. Their earnest efforts to grab on to the wave of IP products were for naught. Not to mention the fact that IPEdge was subpar to the more quickly-advancing IP alternatives.

By that time, they had missed not only the IP boat, but the Cloud boat as well, and it was just too late to catch up. They would have needed a cloud offering a few years back to prevent their demise.

The Latest Trends

We are beginning to see a pattern of legacy and on-premise providers either closing shop or doing a major overhaul and switching to the cloud. Many believe that the technology is simply better. It is more flexible, feature-rich, and economical. If Toshiba is one of the first in a long line of on-site providers that will close, perhaps now is the time to consider the cloud.

toshiba telecomBut even more importantly: What will be next after the cloud? Surely technology is not going to stall and cease to advance now. Now is not only the time to move to the cloud, but time to move to a provider that has a pulse on past, current, and future trends. After all, Toshiba’s products were once the latest technology, but their failure was in moving on to the next trend.

Speaking of missing trends – what about Unified Communications? Amidst all the discussion of Toshiba and the cloud, I have heard little buzz about UC. A trend that is here to stay, Unified Communications brings a unique and powerful feature-set to the table of any modern telecom. The best part about UC is that it can be yours regardless of deployment, which brings us to the next point…

Premise is Not Dead

Premise is far from dead. There is still real value in on-site deployments for many telecoms, Toshiba dealers included. On-premise deployments are a traditional, long-term investment that gives the owner full control over their system. (Read more about the benefits of On-Site PBX here). If your customers are asking for on-site options, then by all means, give them on-site options.

Another too often ignored consideration is the capacity to integrate cloud and Unified Communications applications into on-site solutions. There is no need to choose cloud or premise; you can have the best of both worlds. A perfect example of this is a Key System that can be deployed both on-site and in the cloud. Hybrid is another excellent option, particularly for telecoms like the Toshiba dealers that are entering a phase of transition.

First, let’s define what we mean by hybrid in this scenario. Say a large organization wants to centralize its distribution in a redundant cloud infrastructure. However, they may have remote offices that do not have reliable bandwidth and need an onsite premise or are handling data that requires TDM connections. Why provide two different solutions to them when a combined offering makes for easy deployment and support?

hybrid premise cloudNow humor me for a moment – let’s think of hybrid options in terms of cake. Premise is a good, solid cake. It is undecorated, but it still tastes great and serves its function as dessert. It has been served for years and years to the delight of everyone at the table. But what if you added frosting to it? A nice thick coating of melt-in-your-mouth chocolate frosting. What about icing around the edge? Maybe some fruit on top? Or a scoop of ice cream on the side? This is the hybrid cake. It still has the same, delicious base, but the extra ingredients turn it in to something extra special. In the same way, Unified Communications can empower a premise solution to be better than ever before.

What’s Next After Toshiba?

So the question of the hour is what is next for Toshiba telecom dealers that are losing service? As we mentioned above, now may be the ideal time to migrate to the cloud. The benefits are undeniable. But what about those dealers that simply do not want to move to the cloud? Well, premise is not dead. We know that the cloud just does not make sense for some companies. The good news is that there are still many premise offerings on the market. The best option would be an unbiased provider with both on-site and hosted offerings that keeps ahead of the trends, but without cleaving on to only one type of product.

toshiba phone systemIf you are a Toshiba dealer that has lost or will lose service, we encourage you to consider us as a partner. We have both hosted and on-site solutions and are anxious to roll up our sleeves and put together a best-fit solution for you.

For more information and to chat with an experienced Account Manager, please contact us today:

1-954-278-8470 (U.S.)
1-647-313-1515 (Canada)

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Where to Go After Toshiba Telecom Closing

toshiba telecomtoshiba phone systemThe Toshiba Telecommunications System Division announced last month that they are closing. Current Toshiba Telecom Dealers will lose service on May 22.

If you are a Toshiba dealer looking for a new partner, Bicom Systems has a promo going just for you. If you have not received an invitation letter from Stephen Wingfield yet, download your copy here.

We have noticed many providers jumping on the chance to grab up Toshiba dealers and move them to the cloud. While we are big proponents of hosted solutions, we know that many companies still prefer premise deployments. Whether you want to stick with a legacy system, are ready to move to the cloud now, or are considering inching into the cloud with a hybrid solution, we will come up with a solution that fits your specific situation.

Bicom Systems supports telecom companies around the world with both On-Site (PBX, Call Center, IP Key System) and Hosted (Multi-Tenant) solutions. Established in 2003 with the first ever open-standards, turnkey telephony platform, Bicom Systems is the only Unified Communications provider with all of the pieces including telephony, mobility, security, and billing.

Our seven highly featured products integrate seamlessly to boost sales, growth, and profit. Some of our partners include Telecom Italia, NEC Australia, and Iridium Satellite Services.

Based on the input of existing partners, we compiled a list of ten reasons to move to Bicom Systems. Learn more and download the PDF at


For more information and to chat with an experienced Account Manager, please contact us today:

1-954-278-8470 (U.S.)
1-647-313-1515 (Canada)