Subscription models creating market disruption

Cloud phone systems, like Unity Connected Solution’s Hosted IP Office are sold on a subscription basis. So rather than buying an item outright or making a one-time purchase, you pay a predictable amount on a regular basis, monthly for example. Some companies are still trying to work out if that is the right way to procure technology for their business.

There are now many examples of markets being completely disrupted by subscription models.

Even very traditional markets are being disrupted

Take razors. A very traditional market dominated by Gillette. Many companies have taken a run at them with slightly less expensive versions or trying to out gun Gillette with innovations. Just how many blades do we need on a razor?

Then came Harry’s, Dollar Shave Club and, in the UK, Cornerstone. All offering razors on a subscription basis delivered right to your door. Not only are they helping men in North America and the UK shave their beards but they are shaving off Gillette’s marketshare. While Gillette are trying to fight back with comparisons on shaving quality and the shaving technology, it kind of misses the point of why these newcomers are being successful. Subscription model.

Even Business Insider noticed this trend in a recent article .

Is this just a fad?

We don’t think so. Subscription models leverage a host of new capabilities that make them possible. In the case of cloud phone system it is things like the lower cost per MIP (measure of processing power) of servers, virtualization technology allowing those servers to run 10, 20, 30 or more applications on one server, the low cost and high bandwidth internet availability. They make it possible to cost effectively run applications in data centres. More cost effectively than a single business. With ubiquitous high speed internet, those applications can now be delivered almost anywhere.

Because those servers are sitting in a data centre somewhere else, it would be hard to get businesses to buy them outright, so the subscription model is the only one that makes sense.

Subscription advantages

Besides the simplicity and predictability of a subscription model, there are host of other advantages – pun intended.

You don’t have to worry about the day to day care of the servers nor the powering and cooling. In fact, these data centres have dual power, cooling, networking and even network access and egress. They have generators that are fully tested every month. Something that only the biggest businesses can afford to do.

Scaling is also simplified. Need to add more users? With premise solutions that might mean additional hardware, software or worse, you may have reached the capacity of the current system. This is particularly challenging for fast growing businesses. With subscription services just call your provider. Licenses are added almost immediately. Handsets can be ordered and delivered the next day. You can even get seasonal packages where you increase and decrease licenses on a prescribed basis.

As your core application is built to be accessed ‘remotely’ any user has access no matter where they are located – at home, on the road or in your office. If you have a premise based system it would mean setting up your own VPN, firewall configuration and more.

Subscription models are here to stay and the ideal way to acquire unified communications. Check out our Hosted IP Office.