Is It Really Cloud or Bust?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Is It Really Cloud or Bust?

In an email about a show, it states you can change or die. Then GCN had this cartoon on its Facebook page today:

cloud-cartoon-gcn.jpg

There are so many business options. VAR, VAD, Master Agents, Telecom Agents, manufacturers, carriers, service providers, even B&N are in the midst of a fast changing industry. The sands are shifting fast. But that doesn't mean you only have 2 choices.

By the way in 2001, they were saying the exact same thing about LD slingers as they are saying about T1 slingers now - evolve or die. Psst... there are still people making money from LD today.

The choice isn't just be static or go cloud. There are many pivots to be made that can be successful.

Hardware VARs can join TDMobility to sell cellular plans, devices, iPads, data cards, etc. That adds an element of network and a new line of business while staying within the business model.

Hardware companies have a business model around selling big ticket items. Switching from selling a $10K box to a $500 MRC is tough. You lose the cash flow for your business. You may have quota that you need to hit for co-marketing dollars and gold support. Your sales people who sell a $10K+ box are not going to be successful pushing a $500 service. It's just two different skills and motivations.

The ARPU on cloud is tiny. Cbeyond's TDM ARPU is about $640; it's cloud ARPU is about $210. You have to sell 3x the number of deals every month to keep the Wall Street metric (quarterly revenue) from dipping.

The revenue numbers on hardware, like PBX, are dipping, declining. Of course they are. The price point for a PBX has dropped a lot in 5 years. Hence, the revenue numbers will decline. If I sold 5 oranges last years for $100 each, but this year those same oranges were $80, my revenue will decline even if unit sales remained static. This is also playing out in other lines of business - like T1's, SIP Trunks, Hosted PBX seats, Internet Bandwidth, cable broadband, etc. Cellular ARPU has been pretty flat for a few years. Look at your triple play at home - it's been about a $100 for the last 3 years.

Everything is flat or declining. So you have to hustle more to sell three times the deals to make about the same as 3 years ago. You have to upsell and cross-sell to your customers.

There are a bunch of options other than cloud. Credit card processing, managed IT, RMM, conferencing, video surveillance, and so many other choices. I'm just tired of hearing how it is Cloud or Bust.

Kind of tired of the misuse of cloud too, but that's a rant for another day.

Reminder: every business right now is being disrupted by the Internet, the economy, technology, talent, globalization, an aging population, blah blah blah. "The Cloud" is just one more factor that is disrupting things -- mainly because it is attached to the Internet, which has created more change than the printing press.

Want real disruption? Read this FastCompany article about Amazon. Same day delivery will destroy brick-and-mortar and other online retailers.



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