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PBI Media Study: National Distributors Drop Telecommunications Systems Maintenance Prices New Applications Force Local & Regional Channels To Increase Prices April 28, 2000 - CPE Maintenance PARSIPPANY, NJ, April 28, 2000- National distributors of customer premises equipment (CPE) or traditional corporate phone systems - like Key/Hybrid or PBXs systems - continue to drop their pricing for maintenance services contracts. According to a report from PBI Media, the world's largest research and consulting firm dealing exclusively in the telecom industry, the nation's largest CPE vendors including Lucent Technologies (NYSE: LU), Williams Communications (NYSE: WCG), Norstan Communications (NASDAQ: NRRD), Siemens, GTE (NYSE: GTE), NEC (NASDAQ: NIPNY), SBC Communications, Inc. (NYSE: SBC), Bell South (NYSE: BLS), and Sprint Communications (NYSE; FON), have dropped their maintenance prices, on average, by nearly 2 percent over the past year. Regional and local channels, on the other hand, have been forced to increase contract pricing thanks to rising costs associated with training and retention of service representatives. During the same time period, regional and local vendors have increased prices on average by 2.6 percent. These opposing trends, according to the study, have created near parity in maintenance contract pricing between national and regional/local channels. "Larger distributors are capitalizing on their higher margins and using contract maintenance as a sales differentiator, not necessarily as a profit center," said Frank Stinson, senior product manager at PBI Media. "Increasingly complex applications have resulted in higher labor and training costs for all maintenance providers. However, smaller vendors do not have the resources to absorb these costs without passing some of them along to the customer. For these vendors, maintenance contracts must be profitable." While more demanding end user applications have brought about conditions where national vendors are now competitively priced with regional and local companies for contract maintenance, they have also resulted in a growing advantage for national channels in certain enhanced services. "National maintenance providers have positioned remote services as a key differentiator," added Stinson. "These larger providers have sophisticated remote repair capabilities in addition to simple monitoring. While many regional players offer remote monitoring, most do not offer the same level of sophistication. Local interconnects are largely limited to monitoring of alarms, if they have any remote capabilities at all." In what may be the only study of its kind, PBI Media research provides detailed information on maintenance contract pricing by every major and comprehensive sampling of minor vendors, enabling them to determine how well their service offerings are positioned competitively. The vendors researched for this study represent 85 percent of the U.S. PBX installed base and 55 percent of Key/Hybrid installed base. These vendors include more than 70 manufacturer direct, RBOC, independent telco, distributor,and dealer channels. The report provides detailed analysis of all aspects of maintenance contract feature and pricing by vendor as well as market analysis of installed base, U.S. market share, and revenues. PBI Media (www.thephillipsgroup.net), a global professional services company with offices in Parsippany, N.J., London and Washington, D.C., specializes in market intelligence for the telecommunications and information technologies industries. In addition to conducting primary research studies, the company offers a comprehensive range of professional services, including custom consulting, InfoTracks and TelecomTactics database products, professional conferences, market and competitive intelligence analyses and custom marketing programs. PBI Media is a division of Phillips International, Inc. (http://www.accessintel.com), a $300 million corporation headquartered in Potomac, M.D., which offers a wide variety of quality publications and services for both consumer and business-to-business markets. Phillips is one of the leading publishers in America, with a fast-growing Internet business. |
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