Welcome!

Cloud Expo Authors: Ignacio M. Llorente, Michelle Drolet, Elizabeth White, Michael Bushong, Larry Dragich

Related Topics: Virtualization, Java, Linux, Cloud Expo, Big Data Journal, SDN Journal

Virtualization: Article

Uber Taxis and New Business Models

In a world of NFV we cannot easily map the businesses & business models of today onto the possible business models of tomorrow

A recent post by John Wilmes on the TM Forum website caught my eye for drawing a parallel between the Uber car service business model and the telecom service provider business model as network functions virtualization (NFV) becomes a reality. Wilmes uses this metaphor to remind us of the potential value of dynamic pricing as a tool in carrier efforts to match supply to demand. He also cautions service providers to be careful how they sell the message of dynamic pricing to their customers. So far, so good.

However, this gave me pause: "NFV will let them [operators] create more of almost any part of their infrastructure on the fly, and turn it off when no longer needed, but that too comes at a price - one that is proportionately much higher than what Uber faces. While Uber needs only to make minimal investments in drivers who furnish their own cars, operators also have to buy the ‘cars' up front, or at least reserve them from infrastructure providers."

The message seems to be that customers may face a future of higher prices, supply shortages or both, if surge pricing takes over thanks to NFV. This rather surprised me for two reasons. First, taxis and buses are more efficient in their use of road and energy resources than cars are, even if we still like to drive our own cars sometimes. Similarly, MetraTech became actively involved in the European Telecommunications Standards Institute (ETSI) NFV program mainly because we believe that NFV would result in a dramatically more efficient deployment of network resources and efficient resource allocation should, overall, reduce costs. Services would now be deployed in a cloud-like fashion, making customers happy and providing service providers with new revenue streams. Secondly, my experience is that, despite the small commotion over Uber's surge pricing plans, those of us who use Uber recognize that the system has made it easier and cheaper to get a cab in some locations. According to the drivers I have spoken to, they're driving more and waiting less, so they're more productive. Sounds like a win-win to me.

Wilmes' Uber metaphor suggests we think of Uber, the company, as the service provider, and the car owner and drivers who are contracted to Uber as being the equivalent of network elements, providing transportation from location to location. We could recast the metaphor, and perhaps come to a different conclusion. The car owner and drivers are in fact the service providers, and Uber is an agency that links potential customers to service providers more efficiently. The drivers, in fact, may not own their vehicles, and for some, the optimal business model is to lease a vehicle and set up a maintenance contract with the leasing company, just like bus companies and airlines do.

Perhaps in an NFV-driven world there could be many service providers - both small and large companies - that operate geographically, similar to taxi drivers in the Uber model. The service providers lease the technology from other businesses, whose job is to invest in the infrastructure, build it and run it, selling space in the system to all-comers who can then repurpose the technology at will, according to changing end-customer demands. And where is the future equivalent of Uber in this scenario? We need to think of Uber, not so much as a service provider to end users, but as an agent - a service provider to the service providers who serve the end customers.

Since we are talking about agents, let's remember that as the Internet of Things evolves, agents will effectively be apps that serve both humans and machines. Now, there's a coincidence. What is Uber? It's actually an application that allows end users and service providers to connect. Uber, the company, makes money when people use their app, which represents an old and comfortingly familiar business model.

There is a pleasing symmetry here. Just as chunks of technology in an NFV-driven network can have transient lives in different roles, end users and their service providers will have transient relationships that will last just as long as they are needed. This uber-flexibility, not just of hardware, but of business relationships, will create a competitive market that should benefit customers greatly. On the other hand, perhaps service providers will have a tough time for a period, just as traditional taxi companies stumbled for a time, attempting to use regulation to preserve their old business models instead of embracing the new.

The fun of thinking of the future in this way is that when we try to connect the dots from the present to the future, we can easily come up with something of a tangle. In a world of NFV (and software-defined networking [SDN] too, of course) we cannot easily map the businesses and business models of today onto the possible business models of tomorrow. Whatever we dream up could be wrong. But the biggest mistake of all is to assume that things stay unchanged.

Wilmes follows up his gloomy prediction with this thought: "And the business and technical agility that they need to amortize those costs more quickly with dynamic pricing is also expensive to acquire and maintain."

Perhaps this is what underpins his gloom: keeping track of NFV is going to be difficult and expensive. I have good news for him. Billing systems that enable dynamic pricing across a web of complex business relationships are already here, and when NFV is widely deployed, those systems, including MetraNet will have the industrial power, precision and scalability to handle whatever financial transactions NFV can throw at us. None of this will be trivially easy, but NFV itself is not a trivial exercise. If it were, we would have done it years ago, just like we would've developed Uber back when we still had horse-drawn cabs - if only we'd also had giant data centers, ubiquitous mobile data connectivity, smartphones, journey planning algorithms, GPS and flexible billing and settlement.

More Stories By Esmeralda Swartz

Esmeralda Swartz is CMO of MetraTech. She has spent 15 years as a marketing, product management, and business development technology executive bringing disruptive technologies and companies to market. Esmeralda is responsible for go-to-market strategy and execution, product marketing, product management, business development and partner programs. Prior to MetraTech, Esmeralda was co-founder, Vice President of Marketing and Business Development at Lightwolf Technologies, a big data management startup. Esmeralda was previously co-founder and Senior Vice President of Marketing and Business Development of Soapstone Networks, a developer of OSS software, now part of Extreme Networks (Nasdaq:EXTR). At Avici Systems (Nasdaq:AVCI), Esmeralda was Vice President of Marketing for the networking pioneer from startup through its successful IPO. Early in her career, she was a Director at IDC, where she led the network consulting practice and worked with startup and leading software and hardware companies, and Wall Street clients on product and market strategies. Esmeralda holds a Bachelor of Science with a concentration in Marketing and International Business from Northeastern University.

You can view her other blogs at www.metratech.com/blog.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Cloud Expo Breaking News
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
Cloud Computing is evolving into a Big Three of Amazon Web Services, Google Cloud, and Microsoft Azure. Cloud 360: Multi-Cloud Bootcamp, being held Nov 4–5, 2014, in conjunction with 15th Cloud Expo in Santa Clara, CA, delivers a real-world demonstration of how to deploy and configure a scalable and available web application on all three platforms. The Cloud 360 Bootcamp, led by Janakiram MSV, an analyst with Gigaom Research, is the first bootcamp that introduces the core concepts of Infrastructure as a Service (IaaS) based on the workings of the Big Three platforms – Amazon EC2, Google Compute Engine, and Azure VMs. Bootcamp attendees will get to see the big picture and also receive the knowledge needed to make the best cloud decisions for their business applications and entire enterprise IT organization.
The Internet of Things is a natural complement to the cloud and related technologies such as Big Data, analytics, and mobility. In his session at Internet of @ThingsExpo, Joe Weinman will lay out four generic strategies – digital disciplines – to exploit emerging digital technologies for strategic advantage. Joe Weinman has held executive leadership positions at Bell Labs, AT&T, Hewlett-Packard, and Telx, in areas such as corporate strategy, business development, product management, operations, and R&D.
SYS-CON Events announced today that DevOps.com has been named “Media Sponsor” of SYS-CON's “DevOps Summit at Cloud Expo,” which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. DevOps.com is where the world meets DevOps. It is the largest collection of original content relating to DevOps on the web today Featuring up-to-the-minute news, feature stories, blogs, bylined articles and more, DevOps.com is where the thought leaders of the DevOps movement make their ideas known.
There are 182 billion emails sent every day, generating a lot of data about how recipients and ISPs respond. Many marketers take a more-is-better approach to stats, preferring to have the ability to slice and dice their email lists based numerous arbitrary stats. However, fundamentally what really matters is whether or not sending an email to a particular recipient will generate value. Data Scientists can design high-level insights such as engagement prediction models and content clusters that allow marketers to cut through the noise and design their campaigns around strong, predictive signals, rather than arbitrary statistics. SendGrid sends up to half a billion emails a day for customers such as Pinterest and GitHub. All this email adds up to more text than produced in the entire twitterverse. We track events like clicks, opens and deliveries to help improve deliverability for our customers – adding up to over 50 billion useful events every month. While SendGrid data covers only abo...
SYS-CON Events announced today that the Web Host Industry Review has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Since 2000, The Web Host Industry Review has made a name for itself as the foremost authority of the Web hosting industry providing reliable, insightful and comprehensive news, reviews and resources to the hosting community. TheWHIR Blogs provides a community of expert industry perspectives. The Web Host Industry Review Magazine also offers a business-minded, issue-driven perspective of interest to executives and decision-makers. WHIR TV offers on demand web hosting video interviews and web hosting video features of the key persons and events of the web hosting industry. WHIR Events brings together like-minded hosting industry professionals and decision-makers in local communities. TheWHIR is an iNET Interactive property.
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption by amplifying "faint signals" from the alpha geeks who are creating the future. An active participant in the technology community, the company has a long history of advocacy, meme-making, and evangelism.
SYS-CON Events announced today that Verizon has been named “Gold Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Verizon Enterprise Solutions creates global connections that generate growth, drive business innovation and move society forward. With industry-specific solutions and a full range of global wholesale offerings provided over the company's secure mobility, cloud, strategic networking and advanced communications platforms, Verizon Enterprise Solutions helps open new opportunities around the world for innovation, investment and business transformation. Visit verizonenterprise.com to learn more.
SYS-CON Events announced today that TMCnet has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Technology Marketing Corporation (TMC) is the world's leading business to business and integrated marketing media company, servicing niche markets within the communications and technology industries.
"In my session I spoke about enterprise cloud analytics and how we can leverage analytics as a service," explained Ajay Budhraja, CTO at the Department of Justice, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
“We are starting to see people move beyond the commodity cloud and enterprises need to start focusing on additional value added services in order to really drive their adoption," explained Jason Mondanaro, Director of Product Management at MetraTech, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
"We are automated capacity control software, which basically looks at all the supply and demand and running a virtual cloud environment and does a deep analysis of that and says where should things go," explained Andrew Hillier, Co-founder & CTO of CiRBA, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity. In his session at Internet of @ThingsExpo, Mac Devine, Distinguished Engineer at IBM, will discuss bringing these three elements together via Systems of Discover.
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at 15th Internet of @ThingsExpo, Chad Jones, Vice President, Product Strategy of LogMeIn's Xively IoT Platform, will show you how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
All too many discussions about DevOps conclude that the solution is an all-purpose player: developer and operations guru, complete with pager for round-the-clock duty. For most organizations that is not the way forward. In his session at DevOps Summit, Bernard Golden, Vice President of Strategy at ActiveState, will discuss how to achieve the agility and speed of end-to-end automation without requiring an organization stocked with Supermen and Superwomen.