Is the future in the clouds?

Posted July 22nd, 2010 by andrew

I was reading a forum post yesterday that started out talking about the future of trixbox and ended up with the pros and cons of cloud computing. Cloud computing for anybody that has been under a rock is the idea that you run software hosted in a data center instead of on your own servers. You pay for the software on a monthly basis instead of a one time cost.

Although there has been a lot in the media about cloud computing the idea is far from new. A few years ago it was call SAAS and it has had other names before that. Like many things in technology it seems that when the tech magazines run out of things to talk about they rename an older technology so they can say the same stuff about it that they did 3 or 4 years ago. If fact if you were into computers in the 70s and 80s you probably remember the main frame. With a main frame you have a green terminal and you used to connect to a big computer in some unknown data center to do you work. There were even virtual machines inside the main frame that ran your processes (and you though VMs were invented by VMware). So you can see Cloud Computing has been around for quite a while even if it was called something different.

Banking and finical transactions have been done in "the cloud" for decades. Have you even gone into a bank and said “I would like to see the computer with my $20,000 savings account on it”, No you just assume that your money is safe. In fact I would have loved to have been a fly on the wall in first bank. I imagine the conversation went something like this.

Customer: "So let me get this straight, I give you my money, and you put it in a strong safe, and I can come and see it whenever I want?"

Bank teller: "No we give your money to other people but we write how much you gave us in this little book. When you ask for your money back we take somebody else’s money and give it to you"

Customer : "Yeah, Right I’m going to bury the money in an urn in the back yard like my father did. That way I can always see my money and know that I still have it"

It took years for people to trust banks with their money but now we don’t even think about it. Cloud computer is here to stay and more and more things will be done in the cloud. Google and even Microsoft online have shown us the amazing idea that documents, spread sheets, and email can be done in the cloud (Although all this we being done on main frames in the 70s) There will be technical hurdles such as support to be tackled but most will be resolved over time.

In most cases running services in the cloud is safer and more reliable then on a local machine. Imagine if you stored your bank account of a local PC in your house and your house burns down. You lose your house and your account. People have an idea that if they can see something they can protect it better. But in the case of computing this is not always true.

People who have been selling traditional products sometimes have a hard time thinking about switching to selling cloud services. For example if you sell a 30 seat phone system for $12,000 you could make $3000 or more. That’s a nice paycheck. But if you join an affiliate network and resell a cloud based system such as Fonality Connect you will make maybe 5 dollars per seat per month. That $150 in your first month. Who want to install a phone system for $150? But remember that $150 a month forever… Sell 20 more systems and your up to $3000 per month. You can go on vacation for a month and still make $3000. Hmmm interesting.

Cloud computing has been with us for a long time and is here to stay. What it will be called in the future only the tech writes know.

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Great article Andrew. One

On July 22nd, 2010 SkykingOH says:

Great article Andrew. One of the main hurdles to the cloud is the quality of phone service is directly dependent on the customers Internet connection.

Customers want to run managed services on DSL and cable modems.

Customers that have real DIA from Level 3, Qwest or AT&T that offer meaningful IP based SLA's can have 5 9's of reliability.

For 7 years now we have been offering managed IP phone services in one little market, the Cleveland 320 LATA. Because we are facilities based carrier the custom can choose an on net DSL, T1, TWCBC BCE or Metro Ethernet (fiber) facility and have a complete managed services package. We started with a Sylantro softswitch, today 100% of our customers are on Asterisk.

Nothing could be more true than the statement about the $150 over the $3000. Give me $150/mo profit on a 36 month term. I have a 50% chance of the customer renewing so let's use 60 months as the book value of the paper. That means I will make $9000 over the life of the relationship. This type of annuity income stabilizes cash flow and leads to organization maturity.

By partnering with a "cloud" provider you can do the same thing. Find out who handles the providers back bone. Partner with them to provide the loops and the "cloud" provider for the service and you have a two pronged revenue stream. Toss in managed security and any other service your company may provide and you have deep ties to your customers. Relationship that are resistant to churn.

Building a virtual service provider makes sense. People come on the forum and I light them up when they ask questions about using trixbox as a service provider platform. Building your own infrastructure is a fools errand. My company was already an entrenched ISP and a service company with 25 years in the community and it still took us four years to turn positive cash flow on the IP voice product.

One of the inherent problems

On July 22nd, 2010 kerryg says:

One of the inherent problems with anything we use in the cloud is access to the cloud. Most certainly our internet speeds and reliability have improved over the years but my internet access and uptime is still not as good as a POTS line or T1 line. Banking, email, writing docs, messaging, and most of the other services we currently use in the cloud are not real-time services like voice calls. Fonality's PBXtra/trixbox Pro has always solved this by having the admin interface in the Fonality data center (cloud) while leaving the telephony circuits on the customer premise. With this "cloud managed" system you can suffer an internet failure without losing your phone system. With a fully cloud-based architecture your business may come to a screaming halt every time there is a network hiccup.

Vonage is a great example, for years they struggled with having to replace 1/3 of their user base every year because the Internet was simply not ready to be used as a full-time replacement for traditional phone lines. Fast forward a few years to today and it is going to be very interesting to see how Fonality can position itself and offer a SAAS (cloud) offering that is truly ready for prime time. Is the network finally ready? Have we solved QoS issues? Are fully cloud based telecommunications going to be "good enough". Its going to be interesting to watch.

I use cloud drives for

On July 22nd, 2010 PowerOn says:

I use cloud drives for backups and it works great for that. Not sure if it could ever handle a real time application like Asterisk. I have my doubts. It can probably work ok for things like web and email servers. I'm not aware of anyone successfully running Asterisk on the cloud. I know people have tried and got it working but I don't think they ever got it working to the point where it worked well.

Rent an Asterisk Virtual Private Server.
http://vps.powerpbx.org

I would like to see the

On July 22nd, 2010 obeliks says:

I would like to see the computer with my $20,000 savings account on it
You should clarify your analogy refers to an ancient time, before we had over quadrillion dollars in the derivatives market
http://www.google.com/search?q=quadrillion+derivatives
1 Quadrillion = 1000 Trilions - 20x the GDP of the world ;-)))))

A rose by any other name

On August 6th, 2010 lpe397 says:

Client/Server, ASP, Hybrid-hosting...

The cloud has one major drawback, and that is still one's connection to the net. Unless you are doing business with a vendor that is BOTH your ISP and your VoIP provider you probably will have issues.

But more to the point, the cloud is really only of value to small and low-end medium sized businesses. Moving your systems to the cloud still doesn't absolve a company from hiring a geek. Someone has to manage the end points.

Now... the general rule with consultants, contractors, vendors is to use them as sparingly as possible to avoid the costs. The goal with employees is to keep them as busy as possible in order to maximize your work per dollar. What I see is companies bringing their services in-house whenever possible. This is why my company will never use tb Pro. Why pay hosting fees. It also means we will probably never us tbCE since Fonality seems hell bent on forcing us to buy tbPro in order to get HUD3. So Fonality is giving up 300 licenses of HUD3 because they want us to buy tbPro. I don't think so.

On the other end is who owns what goes into the cloud. Facebook is a prime cloud example. Hosted websites, phone service, etc is another. Who owns the data you put there. Again, my company brings as much as possible in-house to maintain full control.

That's not to say the cloud model is not right for us totally. We host Citrix out of our data center, and our remote employees connect remotely. So this is the cloud where we are the cloud, not vendors.

But I see where you're coming from Andrew.

This is really interesting

On August 26th, 2010 DaveHaertel says:

This is really interesting to note now that there is such a huge storm brewing over Net Neutrality (stirred up most recently by AT and T, Verizon and Google). With complete and utter Net Neutrality you will never be able to work towards getting, as far as I'm concerned, QoS settings that are the perfect and ideal setting for VOIP traffic in the cloud.

Net Neutrality guaruntees that every bit is the same as any other bit, i.e., a you tube video packet has the same priority as an email packet as a VOIP packet as an FTP packet as a Bit Torrent packet and on and on and on. I'm not a proponent of the Government getting involved in this one way or the other but I also think that the providers are only looking at their bottom line, not the best interest of the consumer, so this is definitely an issue that I can see both sides of and no need to debate Net Neutrality here.

That being said however if VOIP companies could prioritize routing of VOIP packets over some of the major public leased Internet space the quality could become bearable and using VOIP in the cloud might actually be a more feasible option. The fact of the matter is that right now, you only have QoS control inside your building, once your packets hit the public internet you really can just hope for the best (or pay for some dedicated private routes (also spelled Expensive)) and even then, there's no real guaruntee of quality. Kerry is right though, in most cases you won't get anywhere near the same level of quality with VOIP that you will with POTS or T1 lines, the dream is just to get good enough quality out of VOIP to make it worth the cost savings, I just don't see that as possible in the cloud. That's just adding more points of contact that you don't have any control over.

David J Haertel
Port City Technology, LLC
Charleston, SC

The dream is much closer

On August 26th, 2010 SkykingOH says:

The dream is much closer than you think. As many of you know I am the CTO/Owner of an ITSP that serves the Northern Ohio markets.

We have been gently stepping out of our local market with carefully selected customers to hone our processes before rolling out the product.

Our network is peered with Level 3, Qwest and Time Warner (fiber where the t-bone (Time Warner Network) and a-bone (old Adelphia Biz network) meet. Our plans are to add AT&T MIS and Covad to the mix before launch.

Additionally we offer managed VPN's. Our clients access their PBX's through a SSL web based VPN. Remote offices can choose to have us send a managed Cisco firewall that takes care of the VPN for the entire office.

What this means to our customers is if they have a Time Warner, Covad, Level 3 or AT&T Internet circuit we are "on net" and QoS works end to end with an SLA (Service Level Agreement) to back it up.

It's quite a change and the network is years in the making. We just completed our move to an Equinix Colocation facility (www.switchanddata.com). This is the Park Avenue of switching centers with unlimited connectivity options and an incredible secure and safe environment for our network.

I will be sending out an announcement when we have our new packages broadly available in the 4th quarter of this year.

There are still many things

On April 12th, 2011 SofiaB says:

There are still many things that we need to do so we can make things right.It isn't just a simple task when it comes to financial matter.Are you aware of what happened to Johnson and Johnson company?The Wall Street Journal reports that Johnson & Johnson has agreed to pay the United States and U.K. governments more than $77 million in fines for bribes offered to doctors in three European countries and kickbacks paid to secure business from previous Iraqi dictator Saddam Hussein. Provided Johnson & Johnson commits no further infractions of U.S. anti-foreign bribery laws, the U.S. Justice Department will bring no further charges against the company for these bribery charges. Here is the proof: Johnson & Johnson to pay $77 million i nfines for bribery