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TELECOMMUNICATIONS SYSTEMS MAINTENANCE OUTPACES HARDWARE SALES GROWTH August 31, 1999 - GLOBAL TELECOMMUNICATIONS PARSIPPANY, NJ, August 31, 1999-- Maintenance services for corporate telecommunications systems have become an important source of vendor differentiation in the fiercely competitive customer premises equipment (CPE) market, according to a new study by PBI Media-InfoTech, a consulting firm based in Parsippany, NJ. In an equipment market characterized by heavy price discounting of initial system prices, post-warranty service agreements have become a key source of competitive differentiation for many CPE dealers and manufacturers with direct sales channels. As a result, vendors are making substantial investments in high-tech remote monitoring and repair capabilities and enhancing the feature content of their maintenance services offers for telecommunications equipment customers. "Despite eroding prices for CPE hardware, pricing for maintenance services has remained stable, reflecting the increasing underlying value of advanced maintenance services infrastructure," according to Shelly Tyler, an analyst with PBI Media-InfoTech who led the study. "Average pricing for a standard 8-5/Monday-Friday maintenance contract increased only 1 percent over the past 12 months, while feature content has been significantly enriched." The combined market for PBX and Key/Hybrid system maintenance services, including maintenance contracts, time & materials, moves/adds/ changes labor, and dedicated technician services, is estimated to increase 15.5 percent in 1999 over 1998, from $2.52 billion to $2.91 billion. Over six hundred providers compete to serve an installed base of more than 107 million PBX and Key/Hybrid System communications ports nationwide. Market share leaders include: Lucent Technologies (NYSE:LU) with 37.8% market share of PBX contract maintenance base, Williams Communications (NYSE:WMB) with 14.9% share, Siemens with 10% share, and Norstan Communications (NASDAQ:NRRD) with 4.1% share. The study found that increasing numbers of CPE vendors are remote monitoring extensive voice and data networks, detecting early symptoms of potentially serious problems, and correcting them, often without any customer awareness that the problem was developing. Other feature enrichments include better on-site response commitments, toll fraud protection, lightning protection, and less expensive 24x7 on-site coverage. Meanwhile, there is a high level of merger and acquisition activity in the industry, especially among small business system vendors. Some large interconnect companies are using this strategy to achieve a national presence, while some manufacturers are moving to build their direct sales channels by acquiring local interconnect firms in targeted markets. In what may be the only study of its kind, PBI Media-InfoTech research provides detailed information on maintenance contract pricing by every major and most 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 80 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-InfoTech is a worldwide consulting firm specializing in strategic solutions for corporate clients in the telecommunications and information technologies industries. The firm is part of PBI Media, a division of Phillips International Inc. of Potomac, MD, which has 1,250 employees and total revenues of $350 million. PBI Media-InfoTech, based in Parsippany, NJ, is the telecommunications and information technology unit of PBI Media, a division with 100 professionals at offices in New Jersey and in London. For more information on our CPE products Click Here, or contact our sales department at infotech@accessintel.com |
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