Home and Small Business Usage
Historically, the expense of full-fledged PBX systems has put them out of reach of small businesses and individuals. However, since the 1990s there has been a large set of small, consumer-grade and consumer-size PBXs available. These systems are not comparable in size, robustness or flexibility to commercial-grade PBXs, but still provide a surprising set of features.
The first consumer PBX systems were for the analog telephone systems, typically supporting four private analog and one public analog line. They have the size of a small cigar box or smaller and are inexpensive (e.g. US$50).
Particularly in Europe these systems for analog phones were followed by consumer-grade PBXs for ISDN. Using small PBXs for ISDN is a logical step, since already the Basic Rate Interface of ISDN (which is the phone interface individuals and small businesses typically get) provides two logical phone lines (two B channels) which can be used in parallel. Small, entry-level systems are also extremely cheap (e.g. US$100).
With the pickup of VoIP by consumers, of course consumer VoIP PBXs have seen the light, and PBX functions have become simple additional features of consumer-grade routers and switches.
Proponents of recent open source projects (in particular, Asterisk and SIPfoundry) claim that their initiatives have finally brought PBXs within the reach of individuals and small businesses. However, some affordable off-the-shelf solutions have been available since the beginning of the 90s. The mentioned open source projects provide more flexibility and more features (often not needed or understood by average users) on standard hardware platforms, plus means to actually inspect and change the inner working of a PBX. They have also opened business opportunities for newcomers to the market of mid-size PBX, since they have lowered the entry barrier for new manufacturers .
History
Historically a PBX was a company's manual switchboard, and was known as a PMBX (Private Manual Branch eXchange). These were gradually replaced by automated electromechanical and then electronic switching systems, called PABXs (Private Automatic Branch eXchange). As PMBXs are almost unheard of these days, the terms PABX and PBX have become synonymous. When PABXs were built using solid state and digital components the term EPABX came into use but PBX is still more widely recognized. The PBX term was dominant for so long, that it is now being applied very liberally to systems providing complex services regarding telephony, even if they are not Private, Branches or eXchanging anything.
PBXs were distinguished from smaller "key systems" by the fact that external lines are not normally indicated or selectable at an individual extension. From a user's point of view calls on a key system are made by selecting a specific outgoing line and dialing the external number; calls on a PBX are made by dialing the escape code (usually 9, 0 in some systems) followed by the external number; an outgoing trunk line is automatically selected upon which to complete the call. This practice is becoming obsolete as number analysis systems have been changing with modern technology - you can use internal numbers or external numbers without any need for escape codes.
Overview
The Private Branch eXchange has gone full circle as a term. Originally having started as an organization's manual switchboard (operated by a person plugging cables into sockets), they have evolved in to VoIP centers that are hosted by the operators or even hardware manufacturers. These modern IP Centrex systems offer essentially the same service, but they have moved so far from the original concept of the PBX that the term hardly applies at all.
PBXs are differentiated from "Key Systems" in that users of Key systems manually select their own outgoing lines while PBXs select the out going line (trunk) automatically. Hybrid Systems combine features of both.
Initially, it was private since in general it was owned by a company, which wanted to have its own branch to save some money in, for example, internal calls. This was done by having the exchanging or switching of circuits done locally, inside the company. Because fax machines, modems (though the PBX may degrade line quality) and many other communication devices can be connected to a PBX, extension developed to a generic term describing all devices connected to a PBX. The PBX's are connected to the outside world by a number of lines called trunk lines.
After the PBX business took off, PBX's started offering services that were not available in the operator network to small businesses and home users. The status quo was changed after several decades by two significant developments during the 1990's. One was the massive growth of data networks (and the concept of packet switching entering public consciousness) and the other one was the trend of focusing on your core competence. Data networks meant that companies had to have packet switched networks anyway, so putting the telephone calls there was tempting as it was. The Internet - and its low price on global communications - was the final straw, and the VoIP PBX was created. Technically nothing was being eXchanged anymore, but the term PBX was very well recognized, and there apparently were no major pushes for a different acronym.
On the other hand, most companies realized that handling their own telephony was in fact not their core competence. Not to mention, PBX services had always been hard to arrange for smaller companies. These combined to create the concept of Hosted PBX, where the PBX was actually managed by the telephone company, and the customer company just had to sign up for a service rather than buy an expensive piece of hardware and then maintain it. This essentially removed the branch from the private premisis, making it centrally managed.
Even though VoIP gets a great deal of press, the old circuit switched network is alive and well, and the already bought PBX's are very competitive in services with modern IP Centrex's. So currently we have 4 distinct scenarios in use:
PBX (Private and Circuit Switched)
Hosted/Virtual PBX (Hosted and Circuit Switched) or traditional Centrex
IP PBX (Private and Packet Switched)
IP Centrex or Hosted/Virtual IP (Hosted and Packet Switched)
Since in reality people want to call from the IP side to the Circuit Switched (SS7/ISUP), the hosted solutions usually have to maneuver in both realms in one way or another. The distinctions are seldom visible to the end user.
