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How Cloud Tech Enables Low Costs For Start-Ups


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View of the clouds from the window of a startup company

Consumer technology is evolving at a rapid pace. Smartphones would have seemed fantastical as recently as a decade ago – but now they’re commonplace. Social networking, as well, has unified people across time zones and continents in ways that earlier generations wouldn’t have been able to imagine.

The revolution in consumer technology has greatly improved the way companies interact with each other and their customers. The democratization of advanced electronic devices (and developments like cloud computing) have greatly reduced the cost of new technology, as well – so it’s now possible to launch a company from scratch for very little money.

As venture capitalist Duncan Davidson explained recently in a ReadWriteWeb post, the cost of starting an internet company has plunged by two orders of magnitude in just a decade. “The cost of launching an internet product has dropped from $5 million [in 2000] to $500,000 in 2005, to $50,000 today,” he wrote.

What, exactly, makes it possible to launch a business affordably? The evolution of business phone systems offers a clue. Ten years ago, a business had to buy an on-premise PBX to gain access to enterprise-level phone features. But PBXs – pricey to install and maintain – are on the way out. Today, businesses can simply plug in a cloud-based phone system and receive world-class service at rock-bottom rates.

Witness, for example, LifeGuardian Technologies’ experience with RingCentral. By signing up for RingCentral Office in 2009, the medical-device distributor was able to slash its monthly phone bill by 85 percent – from more than $800 to just $99.

Food-products company Fusion Brands offers another example of how new technology can drastically reduce the cost of doing business. The company was spending nearly $20,000 a year for an on-premise phone system; now, it pays vastly less for top-tier phone service with RingCentral.

“RingCentral empowers us to compete with the responsiveness and operational depth of our largest competitors, at a fraction of the cost,” Fusion Brands founder Kim Oberlin says. “You simply can’t find a better deal than RingCentral.”

Phone service isn’t the only area in which businesses can save money with modern technology. Google Docs makes it possible to communicate and collaborate for just a few dollars per user per month, while Amazon’s EC2 service grants access to enormously powerful computing resources at a low pay-as-you-go rate.

What all these services have in common – aside from their affordability – is the fact that they exist in the cloud. It’s cloud computing technology, in fact, that really makes low-cost business IT a reality. By granting thousands or millions of users access to their infrastructure, cloud service providers make enterprise-quality features available to all at a low price.

And with cloud computing coming into wider and wider use – more than half of our customers already use it to power their businesses – the cost of cloud services should keep falling. Thanks to the cloud and the applications it powers, it’s a great time to be launching (or running) a business.

KWs: small business, SMB, small business advice, start-up, lean start-up, cloud computing, business services

Originally published Jul 27, 2012, updated Jun 07, 2024


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