By deploying internet telephones and a computer server running software to control telephone calls a business may enjoy all the functions of a PABX (Private Automatic Branch Exchange) telephone system without having to own a PABX. The IP telephone solution is thus a "Virtual" PABX.
A telephone system that relies on IP technology (as opposed to traditional PSTN technology) and behaves like a PBX system. Main advantage is it does not require the large capital investment up front that is normally required for PBX systems.
See IP PBX. A PBX not in your premises but on the Internet.