VoIP offers a variety of services, all of which have different implementation options. While some services require on-premises hardware, which consists of self maintenance and management, others service options may be provided and maintained by the providers’ off-site hardware/data centers, or even digitally. The second of these modes, designated as managed, hosted, or cloud services, is simple and easy; therefore, it’s generally popular amongst users. Though each option is similar in their general offerings, there are variances to note. The differences between managed and hosted solutions are marginal—as they ultimately require different levels of user involvement. While this could be said regarding cloud and hosted PBX, there are some differences to be aware of.

Hosted PBX refers to service that is offered by a provider that hosts physical servers running users’ services at a separate location. With this, users typically access the service via direct network connection. Simply put, hosted PBX services provide users with full functionality; however, all equipment/hardware is located off of the user’s premises. In doing this, the service is delivered through the internet. Different from this are cloud-based services, more specifically cloud PBX. Generally, cloud PBX refers to hosted services delivered via the Internet. Yes, this sounds almost identical to hosted PBX, but the two should not be confused.

Generally, cloud service is built to increase interconnectivity and expand users’ range of collaboration. In doing this, there is a greater sense of individuality. With a hosted PBX solution, service is scaled to a specific size; therefore, all features are uniform. Inversely, cloud PBX is typically more scalable, resulting in more customizable features on a more individual basis. This being said, users should know the intended use of the system before employing it as each mode has different applications. For example, for a large business, a hosted PBX service would work well to create a uniform service amongst staff. Inversely, for smaller businesses or even residential use, a cloud PBX service would better allow growth and customizability.

Along with intended usage, cloud and hosted PBX have different sustainability. Cloud providers cannot predict usage patterns accurately. Though providers can generally identify patterns, there is no way to predict spikes in usage; therefore, there is no way to ever accurately predict (or scale) users’ patterned uses. Subsequently, spikes in usage can greatly impact the cloud service for every user on the shared network. Aside from the volume of usage, storage capacity can be another limiting factor with cloud service. For example, if users have 500GB of hard drive space divided amongst a number of users space is going to fill up quickly.

Pricing is amongst both modes varies also. Neither option requires hardware; therefore, there is cost benefit to start with. Hosted PBX often implores a pay-per-seat model, which requires users to pay for capacity that might never be used. Inversely, cloud PBX typically allows users to pay based on usage; therefore, you pay for what you use. Again, larger businesses with a sizable staff may benefit from hosted PBX as they will undoubtedly need more capacity. On the other hand, smaller businesses and/or residential applications generally have fewer users, and therefore require less capacity. In short, hosted PBX is better suited for users who know they need certain amount of capacity and cloud PBX is better suited for users employing the solution on a touch-and-go basis. Also, as stated above, hosted PBX does not accommodate scalability as cloud PBX does (on-demand); therefore, it may be more expensive to scale a hosted solution.

Both hosted PBX and cloud PBX are quality solutions that operate similarly. The differences ultimately rest in usability, pricing, and interconnectivity; therefore, it’s crucial that users define their intended uses before selecting a service. While each service offers different advantages, hosted PBX is a more reliable service; however, both are ultimately better suited for certain functionalities.

For a more in-depth understanding, check out our guide to what cloud PBX is.

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