The IP Centrex/Hosted PBX market is poised for explosive growth over the next 4 years, with revenues reaching approximately $1.3 billion by 2009, reports In-Stat. The demand in the Small and Medium business (SME) space, the sweet spot for these hosted services, has been accelerating for several years, the high-tech market research firm says.

IP Centrex/Hosted PBX is a hybrid of two different voice-switching systems, legacy Centrex and legacy Private Branch Exchange (PBX) solutions. "The main drivers for the service include cost savings, an enhanced feature set including mobility and integrated messaging options, ease-of-use, greater control, convergence, and system access via a Web portal,” says David Lemelin, In-Stat analyst. "However, it's worth noting that growth in this market lags significantly behind the dynamic growth we have seen with Broadband VoIP in the US."

Enhanced feature sets, particularly forwarding service that allow users to always be found and unified messaging that allows control over email and voicemail via a web portal, are beginning to drive demand.

A Fall 2005 In-Stat survey of over 1000 randomly selected business telecom decision-makers indicated that upwards of 30% of medium and enterprise businesses have at least experimented with IP Centrex/Hosted PBX solutions.

The market is focused on customers with 10 to 300 end-users per location. The sweet spot is SME customers in the 25–60-seat-per-location range.