Click here to close now.

Welcome!

SDN Journal Authors: Lori MacVittie, Mat Mathews, Michael Jannery, Liz McMillan, Juha Holkkola

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, now part of Ericsson. 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. She 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.


@CloudExpo Stories
Today, IT is not just a cost center. IT is an enabler and driver of business. With the emergence of the hybrid cloud paradigm, IT now has increasingly more capabilities to create new strategic opportunities for a business. Hybrid cloud allows an organization to utilize multi-tenant public clouds, dedicated private clouds, bare metal hosting, and the associated support and services for the right use cases through an on-demand, XaaS model. This model of IT creates tremendous opportunities for busi...
SYS-CON Events announced today that BroadSoft, the leading global provider of Unified Communications and Collaboration (UCC) services to operators worldwide, has been named “Gold Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Compa...
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applicatio...
PubNub on Wednesday released an open source template to allow developers to add Skype-like video chat into their apps. The free template provides a fully functional video chat platform using WebRTC, PubNub and Google Authentication for a global, reliable collaboration solution. “While the WebRTC protocol has created huge excitement as a way to deliver video chat ubiquitously, there’s still a gap between the protocol itself and the ability to deploy a working, globally scaled, collaboration appl...
SOASTA, the leader in performance analytics, today reported record growth of the CloudTest community, exceeding 30,000 registered users of the CloudTest platform in Q1 2015. SOASTA also announced widespread adoption of its Web and mobile testing solutions, with more than 1,600 customers completing more than 285,000 tests using CloudTest during the quarter. This rapid growth shows that DevOps-driven digital businesses are embracing a more continuous approach to testing, and CloudTest is meeting t...
The IoT Bootcamp is coming to Cloud Expo | @ThingsExpo on June 9-10 at the Javits Center in New York. Instructor. Registration is now available at http://iotbootcamp.sys-con.com/ Instructor Janakiram MSV previously taught the famously successful Multi-Cloud Bootcamp at Cloud Expo | @ThingsExpo in November in Santa Clara. Now he is expanding the focus to Janakiram is the founder and CTO of Get Cloud Ready Consulting, a niche Cloud Migration and Cloud Operations firm that recently got acquir...
ProfitBricks has launched its new DevOps Central and REST API, along with support for three multi-cloud libraries and a Python SDK. This, combined with its already existing SOAP API and its new RESTful API, moves ProfitBricks into a position to better serve the DevOps community and provide the ability to automate cloud infrastructure in a multi-cloud world. Following this momentum, ProfitBricks has also introduced several libraries that enable developers to use their favorite language to code ...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists will discuss how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations m...
SYS-CON Events announced today that kintone has been named “Bronze Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. kintone promotes cloud-based workgroup productivity, transparency and profitability with a seamless collaboration space, build your own business applic...
SYS-CON Events announced today that Stratoscale, the new data center operating system, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Based in Herzeliya, Israel, Stratoscale is redefining the data center, developing a hardware-agnostic, software platform hyper-converging compute, storage and networking across the rack or data center. The self-optimizing platform automatically distributes all physical...
of cloud, colocation, managed services and disaster recovery solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. TierPoint, LLC, is a leading national provider of information technology and data center services, including cloud, colocation, disaster recovery and managed IT services, with corporate headquarters in St. Louis, MO. TierPoint was formed through the strategic combination of some of t...
How do you securely enable access to your applications in AWS without exposing any attack surfaces? The answer is usually very complicated because application environments morph over time in response to growing requirements from your employee base, your partners and your customers. In his session at 16th Cloud Expo, Haseeb Budhani, CEO and Co-founder of Soha, will share five common approaches that DevOps teams follow to secure access to applications deployed in AWS, Azure, etc., and the frict...
SYS-CON Events announced today that Soha will exhibit at SYS-CON's DevOps Summit New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Soha delivers enterprise-grade application security, on any device, as agile as the cloud. This turnkey, cloud-based service enables customers to solve secure application access and delivery challenges that traditional or virtualized network solutions cannot solve because they are too expensive, inflexible and operational...
SYS-CON Events announced today that Vicom Computer Services, Inc., a provider of technology and service solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. They are located at booth #427. Vicom Computer Services, Inc. is a progressive leader in the technology industry for over 30 years. Headquartered in the NY Metropolitan area. Vicom provides products and services based on today’s requirements...
SYS-CON Events announced today that Ciqada will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Ciqada™ makes it easy to connect your products to the Internet. By integrating key components - hardware, servers, dashboards, and mobile apps - into an easy-to-use, configurable system, your products can quickly and securely join the internet of things. With remote monitoring, control, and alert messaging capability, you will mee...
What exactly is a cognitive application? In her session at 16th Cloud Expo, Ashley Hathaway, Product Manager at IBM Watson, will look at the services being offered by the IBM Watson Developer Cloud and what that means for developers and Big Data. She'll explore how IBM Watson and its partnerships will continue to grow and help define what it means to be a cognitive service, as well as take a look at the offerings on Bluemix. She will also check out how Watson and the Alchemy API team up to off...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
With IoT exploding, massive data will transform businesses with opportunities to monetize almost anything that can be measured. In this C-Level Roundtable Discussion at @ThingsExpo, Brendan O’Brien, Aria Systems Co-founder and Chief Evangelist, will lead an expert panel of consultants, thought leaders and practitioners who will look at these new monetization trends, discuss the implications, and detail lessons learned from their collective experience. Finally, the panel will point the way forw...
SYS-CON Events announced today that Column Technologies, a global technology solutions company, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Established in 1998, Column Technologies is a leader in application performance and infrastructure management for commercial and federal markets. The company is headquartered in the United States, with a diverse and talented team of more than 350 employees around th...
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY., and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ...