Pure-ism is financially dangerous

As the world around changes, services are rapidly changing from human rendered services, to bots and applications that run on your mobile device. Ranging from your local pizza shop, to a multi-billion corporation – all are rapidly moving to the bot/application economy paradigm – in order to facilitate growth and lower their TCO.

According to SkyHigh Networks study, the following may come as a shock to most – but most  enterprises will use up to 900 different cloud applications. These require an amazing number  of over 1,500 different cloud services in order to work. Out of these 1,500 cloud services, a group of 50 top-most cloud services can be observed, normally relating directly to infrastructure – we’ll call these “Super Clouds”.

The “Super Clouds” can be divided into several “Primary” groups:

– Infrastructure Clouds (Amazon AWS, Google Compute, Microsoft Azure, etc.)
– Customer Relation Clouds (Salesforce, ZenDesk, etc.)
– Real Time Communication Clouds (Twilio, Nexmo, Tropo, etc.)

It is very common for a company to work solely with various cloud services – in order to provide a service. However, using cloud services has a tipping point, which is: “When is a cloud service no longer commercially viable for my service?” – or in other words: “When do I become Uber for  Twilio?”

Twilio’s stock recently dropped significantly, following Uber’s announcement – http://bit.ly/2rVbzxG. Judging from the PR, Uber was paying Twilio over $12M a year for their services, which means that for same cash, Uber could actually buyout a telecom company to do the same service. And apparently, this is exactly what’s going to happen, as Uber works to establish the same level of service with internal resources.

Now, the question that comes to mind is the following: “What is my tipping point?” – and while most will not agree with my writing (specifically if they are working for an RTC Cloud service), every, and I do mean EVERY type of service has a tipping point. To figure out an estimate your tipping point, try following the below rules to provide an “educated guess” of your tipping point – before getting there.

Rules of Thumb

  • Your infrastructure cloud is the least of your worries
    As storage, CPU, networking and bandwidth costs drop world-wide – so does your infrastructure costs. IaaS and PaaS providers are constantly updating prices and are in constant competition. In addition, when you commit to certain sizing, they can be negotiated with. I have several colleagues working at the 3 main competitors – they are in such competition, where they are willing to pay the migration prices and render services for up to 12 or 24 months for free, in order to get new business.
  • Customer Relation Clouds hold your most critical data
    As your service/product is consumer oriented, your customers are your most important asset. Take great care at choosing your partner and make sure you don’t outgrow them. In addition, make sure that if you use one, you truly need their service. Sometimes, a simple VTiger or other self hosted CRM will be enough. In other words, Salesforce isn’t always the answer.
  • Understand your business
    If your business is selling rides (Uber, Lyft, Via, etc), tools like Twilio are a pure expense. If your business is building premium rate services or providing custom IVR services, Twilio is part of your pricing model. Understand how each and every cloud provider affects your business, your bottom line and most importantly, its affect on the consumer.

Normally, most companies in the RTC space will start using Amazon AWS as their IaaS and services such as Twilio, Plivo, Tropo and others as their CPaas. Now, let us examine a hypothetical service use case:

– Step 1: User uses an application to dial into an IVR
– Step 2: IVR uses speech recognition to analyze the caller intent
– Step 3: IVR forwards the call to a PSTN line and records the call for future transcription

Let us assume that we utilize Twilio to store the recordings, Google Speech API for transcription, Twilio for the IVR application and we’re forwarding to a phone number in the US. Now, let’s assume that the average call duration is 5 minutes. Thus, we can extrapolate the following:

– Cost of transcription using Google Speech API: $0.06 USD
– Cost of call termination: $0.065 USD
– Cost of call recording: $0.0125 USD
– Cost of IVR handling at Twilio: $0.06 USD

So, where is the tipping point for this use case? Let’s try and separate into 2 distinct business cases: a chargeable service (a transcription service) and a free service (eg. Uber Driver Connection).

  • A Chargeable Service
    Assumption: we charge a flat $0.25 USD per minute
    Let’s calculate our monthly revenue and expense according to the number of users and minutes served.

– Up-to 1,000 users – generating 50,000 monthly minutes: $12,500 – $9,625 = $2,875
– Up-to 10,000 users – generating 500,000 monthly minutes: $125,000 – $96,250 = $28,750
– Up-to 50,000 users – generating 2,500,000 monthly minutes: $625,000 – $481,250 = $143,750

Honestly, not a bad model for a medium size business. But the minute you take in the multitude of marketing costs, office costs, operational costs, etc – you need around 500,000 users in order to truly make your business profitable. Yes, I can negotiate some volume discounts with Twilio and the Google, but still, even after that, my overall discount will be 20%? maybe 30% – so the math will look like this:

– Up-to 1,000 users – generating 50,000 monthly minutes: $12,500 – $9,625 = $2,875
– Up-to 10,000 users – generating 500,000 monthly minutes with a 30% discount: $125,000 – $48,475 = $57,625
– Up-to 50,000 users – generating 2,500,000 monthly minutes with a 30% discount: $625,000 – $336,875 = $288,125

But, just to be honest with ourselves, even at a monthly cost of $48,475 USD, I can actually build my own platform to do the same thing. In this case, the 500,000 minutes mark is very much a tipping point.

  • A Free Service
    Assumption: we charge a flat $0.00 USD per minute
    Let’s calculate our monthly revenue and expense according to the number of users and minutes served.

– Up-to 1,000 users – generating 50,000 monthly minutes: $9,625
– Up-to 10,000 users – generating 500,000 monthly minutes with a 30% discount: $48,475
– Up-to 50,000 users – generating 2,500,000 monthly minutes with a 30% discount: $336,875

In this case, there is just no case in building this service using Twilio or a similar service, because it will be too darn expensive from the start. Twilio will provide a wonderful test bed and PoV environment, but when push comes to shove – it will just not hold up the financial aspects.This is a major part why services such as Uber, Lyft, Gett and others will eventually leave Twilio type services, simply due to the fact that at some point, the service they are consuming becomes too expensive – and they must take the service back home to make sure they are competitive and profitable.

When Greenfield started working on Cloudonix – we understood from the start the above growth issue, and that’s why Cloudonix isn’t priced or serviced in such a way. In addition, as Cloudonix includes the ability to obtain your own slice of Cloudonix or even your own on premise installation – your investment is always safe.

To learn more about our Cloudonix CPaaS and our On-premise offering, click here.

Astricon 2015 Personal Wrap Up

Astricon 2015 is now over, honestly, it flew passed us really fast – at least for me it did. I will refrain from talking about the location of it – as it is more of less a geek’s paradise when it comes to movies and amusement parks. But putting that aside, let’s talk about Astricon itself.

As I see it, Astricon 2015 had distinctively two shining stars – from what I managed to collect. The first one is WebRTC, as it was definitely the talk of the corridors and within the DevCon. Be it a WebRTC controller Lego Puppy, or a connected Tooth Brush – WebRTC is definitely an exciting thing. With the growing popularity of Respoke.io among developers and its inherent connection to Asterisk – I’m confident we’re going to hear more about Respoke in the coming year.

The second one, that is naturally closer to me, is ARI. I’ve seen several people do some really innovative stuff with ARI – and more specifically, PHPARI. I was surprised to learn of a content provider in the Philippines who is using PHPARI to drive over 1500 concurrent calls, topping a total of 5 Million minutes a month – using Asterisk 13 and PHPARI. Man, what a rush! – I started PHPARI about two years ago, I personally know of thousands of installations, but till today, no one really told me what kind of mileage they were getting from it. But learning that someone is packing a 1500 concurrent calls punch with PHPARI, I was ecstatic.

Then, slightly after learning that, I participated a panel with Matt Jordan and Gaston Draque – where we discussed the status of ARI and people had the chance to ask questions. Gaston came to me after the panel saying: “You know, we had a serious fight in the company if to use PHPARI or use GO programming language”. According to Gaston, currently, PHPARI is the most complete toolkit for ARI development – man what a rush. Gaston really knows what he’s doing, I’ve seen some of his work in the past – getting this from Gaston is a serious compliment.

When my wife learned that Astricon this year will be in Orlando, she said: “Take a day off and go have some fun”. So, initially, I was supposed to fly with Eric Klein only. However, we ended up 4 of us in Orlando – which was way more fun. So, for the last day and under the excellent orchestration of Eric, a trip to the Kennedy Space Center was arranged. A group of 21 Telephony geeks got on the bus and took a trip to the Kennedy Space center. Honestly, a highly motivating and inspiring place. Think about it, NASA sent people to the moon, with computer power that is far inferior to your everyday smart phone – simply amazing.

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The trip lasted the entire day – we left the hotel at around 8:30, only to come back to the hotel at around 20:30 – a full day! Honestly, if you are going to Orlando, schedule a day trip to KSC – just to see the Apollo rocket in real life – your jaw will drop!

We finished the day back at the hotel, where the first lady of Asterisk joined us for dinner at Jake’s – which was an evening filled with laughter and jokes all around.

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So, what’s next? I guess I need to start putting my ass to the chair and cranking up the speed on adding new features to PHPARI .Btw, if you want to help, I will would highly appreciate it – it a work of love, but sharing it around is even better.

Where will Asterisk be in your future?

A dear friend, the CEO of fone.do, Mr. Moshe Meir had written a blog post on the fone.do blog. The title is: “Is there a future for Asterisk?

I have a different take on the thing. I think that Moshe is simply asking the wrong question. He should be asking “What is the role of Asterisk in your future?”.

I know Moshe personally, and I’m shocked by the short sighting of his question. Asterisk was born, initially as a PBX – it has evolved to much more than that. Last year, in my presentation, I showed a slide of a large elephant, with various blind people feeling it around – trying to ascertain what an elephant is. Asterisk is that elephant, it will be what you want it to be. You want it to be a PBX, so be it. You want it to be a Video gateway, so be it. You want it to be a services control point for your OTT application, so be it. You decide!

As technologists and visionaries, it is our job to look ahead into the future and think: “What is the next step? where will we be in 5 years from now, in 7 years from now?” – that is called visionary, pioneering, disrupting and most importantly, exceptional. You want to know what the future of Asterisk will be? look at what you need, that is where it will go. Was always the case, and will always be the case.

Yes, I use Kamailio, OpenSIPS, FreeSwitch and other tools. Yes, I’ve used OpenRTC, EasyRTC, Kurento and others. Yes, we still use them and YES – WE USE ASTERISK, and we will most probably keep using Asterisk for our needs – where it fits the best and assumes the task to the best of its ability. This is why every year we come to Astricon, this is why every year we join the DevCon, this is why every year we make it our business to keep track of whats going on in the core. Moshe, you are forgetting, we are not drivers, we are mechanics – we build and fix things. Tony Stark in Iron Man 3 says: “I’m a mechanic” later on the child replies “You’re a mechanic, fix it” – here’s my challenge to you – “FIX IT!” – make it better, make it stronger, make it into the thing you love and want.

One more thing Moshe, and this is something for you to think about – when you write a blog post, on a blog that has no way of allowing its readers to comment or participate in any form, you should not write opinion posts. Opinions are meant for people who can interact and respond.

** EDIT: You can comment to this post via facebook, at: http://on.fb.me/1QQQ18Q

Video Conferencing Plugins – Why?

In a recent blog post by Tsahi Levent-Levi (Aka: bloggeek), he rants about the usage of plugins and various other pieces of software to enable web based video conferencing. And I say – HE’S GOT IT ABSOLUTELY RIGHT!

Why do we really need anything other than WebRTC for video conferencing? why do I need 4 different plugins for WebEx and other bullshit tools on the net?

I suggest that you read his post – he’s got it smack on the dot – https://bloggeek.me/hate-video-conferencing-plugins/