One of the largest providers of PBX hardware (typically used by medium-to-large companies for advanced business phone needs) recently filed for bankruptcy protection. As one news outlet put it, the company needs a refresh for cloudier times. Of course, they’re not referring to the weather. They’re referring to the massive growth in cloud-based business telephone technology that’s making the traditional model of on-premise hardware obsolete.

This disruptive technology is called hosted IP PBX.

Installations of traditional business phone systems, also called TDM PBXs, are on the decline. Meanwhile, cloud-based options like hosted and hybrid (part on-premise, part hosted in the cloud) PBX, and unified communications are on the rise.

Overall, cloud-based PBX and unified communications system revenues grew by 12 percent between the first half of 2015 and the first half of 2016. All of the world’s regions are experiencing growth in deployment, but North America still dominates with 43% of all lines. And there are no signs of this trend slowing. Another report forecasts the hosted IP PBX market will grow by 7.8 percent per year between 2016 and 2024.

This is good news for small and medium-sized business. Why? Because hosted IP PBX solutions make it easy for any company to access enterprise-level telephone features and service quality at a fraction of the price. How’s this possible?

With hosted IP PBX, all of the equipment is owned and operated by your provider. It’s even stored at their facilities, so you can empty out your old telecom storage closet. You don’t have to invest in any equipment to experience a phone system that is robust, flexible, and, best of all, scalable. That means you can add new capacity (when you open a new office or hire more employees at an existing location) simply by contacting your provider and updating your subscription. It takes 1-2 days to get set up, whereas a traditional on-premise IP PBX would take 1-2 months to get up and running.

The business model for traditional, on-prem IP PBX is virtually obsolete. Why invest in expensive new hardware that will become old technology in a few years, when you can subscribe to a hosted IP PBX service that will grow with you AND improve as new technology becomes available?

That’s really what makes this technology so disruptive — its scalability.

Hosted IP PBX is scalable horizontally and vertically

It’s horizontally scalable because you can add new lines or locations without adding any new equipment. All you need to do is make a phone call and update your subscription with your provider. There’s no cap on the number of lines you can have. This also means you can operate several virtual offices, with real, local phone numbers, but no real physical location. This gives you a serious competitive edge when you’re looking to break into a new market.

It’s vertically scalable because the technology is owned by a professional service provider that has to compete for your business. Your provider should make every effort to stay on the leading edge and integrate the latest technology into their service offering. That means faster, higher-quality connections and new features added over time.

A similar shift is happening in the market for software. Many companies are abandoning the old model of buying software and using it until it can no long keep up with their requirements. And they’re migrating to the new model of software-as-a-service (SaaS), where you can buy a subscription to critical business software and receive updates automatically as new features are released.

Both Hosted IP PBX and SaaS offer a lower cost, feature-rich, and scalable alternative for business. It’s no wonder so many business are choosing to switch to hosted IP PBX for their business phone needs.

Curious about making the switch to hosted IP PBX?

We’ll show you how it can be done and walk you through the whole process. Talk to a BullsEye expert to learn more today.