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The Last Days of On-Premise VoIP Systems?

by Bhagwad Park

posted in Communications

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Hosted VoIP services have been growing exponentially over the last couple of years and all indicators point towards a healthy market for cloud VoIP, rather than on premise systems. Even companies that have long maintained their own networks are migrating to the cloud as their PBXs age and support becomes hard to come by.
In the long-term, it appears inevitable that manufacturers and vendors of on premise equipment will switch over to cloud services in one form or the other. They might have to implement their own VoIP service or sell hardware/equipment to cloud providers, rather than enterprise customers. Nevertheless the transition to cloud services will take some time and there are many markets where on premise equipment still has demand.
Growing markets in developed countries
One of the biggest reasons for the huge growth in VoIP in the United States and other developed nations is the fact that they have the underlying infrastructure for cloud services in place. Fast Internet access and sufficient bandwidth are prerequisites for quality audio calls on such services. However there are many markets where the infrastructure is simply not available. In these areas, businesses would much rather rely on on-premise technology which they can control instead of waiting for ISPs to provide high-speed Internet access.
Open standards and platforms
A significant handicap for cloud services in general is the fact that they are closed platforms and utilize proprietary protocols or data formats. This applies to hosted VoIP services as well. There are many organizations that would prefer to implement open source technology or equipment that runs on industry standards. It gives them more control over hardware, quality of the actual service as well as upgrade cycles. This particular market may offer some growth potential for on-premise systems. Until some cloud services start implementing open source technologies, this factor will be an advantage for on premise vendors.
Privacy and security constraints
Although enterprise class hosted VoIP service providers boast impressive security measures, some organizations in specific industry segments have no choice but to own their communication systems due to regulatory constraints. Quite a few EU countries have privacy laws that preclude certain enterprises from using cloud services based in other countries. Such legislation offers an opportunity for on premise systems to dominate the market, at least until such time as cloud providers can set up multiple data centers across the world to service customers.
About the Author: Bhagwad is an expert consultant on business VoIP services.
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