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Analog Phone Systems vs. Digital Phone Systems

Finding the right combination of features and capabilities to meet your business needs requires a basic understanding of the technical and functional differences between both types of systems.

This is a great time to purchase a new business telephone system, with more options and available features than ever before. Many buyers start by choosing between an analog and digital phone system. Finding the right combination of features and capabilities to meet your business needs requires a basic understanding of the technical and functional differences between both types of systems.

The type of telephone system you choose should support the type of business you run. Are you a volume-driven, transaction-based business or do you rely on relationships for your growth? Transaction-based businesses, such as in-store retail, often have relatively simple telecommunications needs. Other businesses rely on cultivating relationships, where impediments to client communication are unacceptable. Do you need to forward calls to a mobile device? What about voice over IP (VoIP)? Do you have a call center, even if it is only two people? These are some of the factors to consider when selecting a phone system.

Dave Michels, UCStrategies consultant, advises businesses to carefully examine their needs when choosing a phone system.

“The challenge for many buyers is understanding how they might use new features of a given solution,” he said. “It is hard to assign specific value to new features without knowing their operational impact.”


Read further to learn more about analog and digital phone systems and the differences between them.


- How are analog and digital phone systems different?
- Analog phone systems versus digital phone systems in small business
- Analog and digital phone system integration





First, let’s look at the basic differences between analog and digital telephone systems. Analog systems have supported businesses for decades. Built on standard copper wire and POTS (plain old telephone service) phones, they are reliable, boast good voice quality, and have the basic features you might find in a typical home phone such as hold, mute, redial, and speed dial. They may also be able to transfer calls between extensions. But their features end there. Because of their simplicity and limited potential for expansion, they are relatively inexpensive to purchase. However, analog systems, because they use less-modular hardware can be expensive to support, configure, and upgrade. For example, changing the location of an extension requires rewiring a punchboard by a professional. Buying analog is cheaper in the short-term but will lock you into a closed system that requires adapters to integrate with common applications such as VoIP and customer relationship management (CRM) systems.

Digital telephone systems are more modern. Digital PBXs are designed with a proprietary bus structure for adding features and capabilities. Boards are added to the cabinets for analog, digital, or IP phones. Features such as music on hold, VoIP integration, and alarm systems can be supported with modular add-on boards.

Today, most digital systems, even if they use proprietary hardware or protocol, offer an IP interface on the controller. The IP interface might allow unified messaging features such as voicemail delivery to email, fax delivery to email, voicemail transcription to SMS, click to dial, and a desktop client. These systems are considered “hybrid PBXs” because they use a combination of proprietary digital hardware and standards-based IP networking.

A fully modern digital PBX is 100% IP and software-based.

Since digital PBX’s do not rely on simple copper wire circuits, you gain more flexibility for adds, moves, and changes. Often those changes can be configured via point-and-click software. Voice clarity is the same or better than analog, and in addition to basic features such as extensions and transfers, digital PBXs offer advanced virtual auto attendants, voicemail and call forwarding options. Digital PBX systems may also provide an interface to integrate with your call center and sales software as well.

Michels said that the advantages of software-based telecommunications solutions are the most important difference between analog and digital systems.

“The most significant change in communications isn’t as much analog/digital/VoIP, but a shift from hardware to software-based solutions,” he said. “Software controlled solutions offer a superior upgrade path and more advanced features for integration with existing and future business systems such as CRM, messaging, and social networking.”




Small businesses want to control costs while enjoying the features used by large businesses. While the low initial cost of an analog system can be tempting, consider ongoing costs and limitations. Pricing has become much more competitive over the last ten years, and both analog and digital systems likely require professional installation. However, an on-premise system requires far more installation and configuration than a cloud-based phone system that uses your existing computer network.

Research is an essential step in purchasing a new phone system. Anticipate how the system features will support your operating needs. The administration of the system will likely be the responsibility of an office manager or IT professional, and a software-based digital PBX will offer an interface that is familiar and flexible.




There are many established ways to integrate analog and digital devices. An analog fax or alarm system, for example, can connect to a digital system via an analog gateway. Analog phone systems can connect to VoIP trunks via multi-port ATA adapters. Selecting the right adapter can be a challenge, as the number and types of ports are dependent on the requirements of your VoIP provider and a professional will likely be needed to install it.

Ultimately, the telephone system you choose should reflect your organization’s vision and unique needs. If you have very simple needs that a home phone system could support and anticipate your needs remaining unchanged, then an analog system may be right for you. If you want a system that will grow and evolve with your business, then go digital. A phone system for small business hosted in the cloud frees up resources to focus on the core business.






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