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How do we define "key system

Telecom analysts and execs may bemoan an increasingly sluggish market for carrier-class telecom and data networking equipment. But they can take heart in one surprisingly resilient, albeit less sexy sector: the market for key and hybrid key/PBX telephone systems.

Businesses, particularly SMBs, are gobbling up the stuff, to the tune of nearly a half million systems per year. And a growing number of these are Internet protocol-enabled. That's a big plus, because Intetnet protocol offers simplified administration, integrated voice and data apps, open standards, and scalability.

But it isn't just IP that accounts for the robust demand. Key and key/PBX hybrids increasingly incorporate such advanced functionality as PC call control, unified messaging, telemanagement, high-speed/multisite networking, one-number/follow-me services, and more. A lot of businesses are concluding they need the new bells and whistles to stay competitive, cut costs, and improve communications with a growing number of remote and mobile workers.

Cruising The Chart

How do we define "key system"? Historically, it referred to systems that required the user to select an available outside (central office) line by pressing one of multiple buttons on their deskset. Strictly speaking, earlier-generation key systems were not switches because they did not pool trunks (or outside lines). PBXs, which do, automatically route (or switch) calls over an open line when the user dials "8" or "9," then the destination number. Also, like older PBXs, key systems historically were proprietary boxes. Unless you were prepared to jettison your investment for another brand, your key system's manufacturer had a lock on upgrades or enhanced functionality you might fancy adding.

Today, few products conform to the "key system" definition in its pure sense. Most are key/PBX hybrids. And many - Avaya's Merlin Magix, Toshiba's Strata DK line, and Vodavi's Starplus products - cross over into the comms server world in functionality and design. While late-generation products continue to incorporate proprietary hardware and software, most are "opening up" (i.e., becoming compatible with third-party products - a key feature of comms servers). Forty-eight of the sixty models featured on the following pages of our roundup support third-party apps, typically via TAPI or other standards-based interface.

More broadly, key systems cater to small and mid-sized businesses requiring up to about 200 phones. But even within this expanded definition, we find exceptions. Interactive Intelligence's Enterprise Interaction Center, for instance, allows up to 480 stations per KSU. And Teltronics' Vision products boast a whopping 576 desksets.

Ultimately, the term "key telephone system" may be of more value to the vendors (who register products with the FCC as such) than to users. But let's not get hung up on labels. What's important to note is that SMB-targeted phone systems pack a lot more punch than in years past. Most of the 60 featured systems, for example, accommodate both analog and digital phones. That's important because, while digital desksets may offer some feature advantages, they are almost exclusively proprietary. With analog, you gain access to a plethora of third-party (and low-priced) brands; plus, if you've already got analog phones, you don't have to throw them away when upgrading.

Also, about a third of the featured systems - Intertel's Axxess, NEC's Electra Elite, Samsung's DCS family, and others - boast IP desksets that make moves, adds, and changes (MACs) a snap. The phones, which carry a unique IP address, can be powered up from any wall jack, so you can forget about time-consuming cabling and reprogramming whenever an employee moves to a new office.

More common still (26) are converged voice/data switches that permit both Internet protocol networking and Internet access. That's a plus for several reasons. First, IP allows for easy integration of computer telephony apps such as unified messaging, call center software, soft phones, plus remote administration and monitoring. Also, IP transport can cut your bill substantially by routing toll calls over the public Internet or privately managed IP network. If, ideally, all of your company's toll calls traveled via IP among offices where you have IP-enabled switches or gateways installed, then your long-distance bill would go to zero. So long as the calls don't jump onto the PSTN, you don't incur charges.

To be sure, IP has its downside. Some critics contend that IP-enabled voice products (especially those designed as pure-play telephony servers) are not as feature-rich as their circuit-switched counterparts. Also, IP telephony, even over a privately managed network, is not as consistently reliable as the PSTN. To assuage customers' concerns on the latter issue, many key systems vendors offering IP networking (typically via an optional IP trunk card installed in the KSU cabinet) also allow for back-up call routing over the PSTN.

IP isn't going away. Gartner Group analyst Kathleen Simpson says that by 2004, 50% of all new phone systems in the less-than-100-station market will be IP server-based systems. That translates to a quarter of a million-plus in annual unit shipments. In revenue terms, Cambridge, MA-based Giga Information Group is forecasting that US sales of IP-enabled switches will attain $1.2 billion by 2005, up from $42 million in 1999.

With or without IP, customers can choose from a host of high-bandwidth connectivity links that key systems manufacturers are integrating into their systems. Of the 60 models featured, 32 offer 1.5Mbps T-1 networking; and 35 provide ISDN PRI and/or BRI access. Only 17 of the solutions, however, enable xDSL connectivity. That's no surprise, given that many ILECs and ISPs are only now coming to market with ADSL, HDSL, SDSL, and other flavors of digital subscriber line service. But DSL providers haven't helped themselves either with often-shoddy service. (See sidebar: "Dissing DSL".)

A clear majority of the key systems key/PBX hybrids featured also incorporate such advanced functionality as PC-based call control (39), least-cost routing (39), unified voice/fax/email messaging (34), and an ACD (41). Such features are especially important to businesses requiring call center functionality. But they also reflect the demands of a rising number of businesses with mobile workforces and multisite locations. Traveling sales reps and execs, for example, can easily stay in touch with colleagues and clients by remotely accessing voice, fax, and email messages via a browser-based unified messaging interface. The trend towards untethered communications and multisite networking is reflected, too, in new one-number/follow-me services, and in the many remote monitoring/administration and station offerings.


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