Jakub Jirsk - Fotolia
Amazon Web Services is testing the waters of the cloud calling market with an aggressive pricing model that has the potential to disrupt the industry.
The tech giant launched a cloud calling plan and a Session Initiation Protocol (SIP) trunking service earlier this year, and this week expanded the latter to include support for inbound toll-free numbers.
Instead of paying a monthly fee for each licensed user, businesses pay based on their usage of the two services -- Amazon Chime Business Calling and Amazon Chime Voice Connector. AWS charges companies a flat rate for each minute users spend on the phone.
AWS has adopted a similar pricing strategy for its online meetings platform, Amazon Chime, and for its contact center, Amazon Connect. In fact, the vendor this week lowered the price for calling through Amazon Connect from $0.0065 per minute to $0.0048 per minute.
"Amazon is offering a really low, disruptive price, which could maybe make some businesses look their way," said Zeus Kerravala, principal analyst at ZK Research, based in Westminster, Mass. "What Amazon is doing is really unchartered territory. We'll see if customers like it."
Amazon built its business on disruptive pricing that undercut competitors. The company is now so massive - AWS alone generated $25 billion last fiscal year -- that it can afford to lose money on endeavors like Amazon Chime as it explores what features or pricing might gain traction in the cloud UC market.
A pay-as-you-go pricing model may not appeal to all business, though. Many companies may prefer the certainty of a fixed monthly bill, especially if they are heavy users of voice calls. What's more, Amazon's business calling plan is a bare-bones service that offers only three basic features: calling, voicemail and SMS messaging.
"For companies that want to be lean and mean, this makes a lot of sense," said Jon Arnold, principal analyst at Toronto-based J Arnold & Associates. "The risk [for Amazon], of course, is it's hard to build revenues on top of this, and it's hard to lock companies in for any kind of loyalty."
Adoption of Amazon Chime, launched in early 2017, still lags behind competing platforms such as Cisco Webex, Zoom, Skype for Business and Microsoft Teams. The release of Business Calling and Voice Connect makes Chime a fuller cloud UC offering, but its limited voice feature set will likely limit its appeal to small and midsize businesses.
Business Calling grants access to the public switched telephone network (PSTN) in the Chime app. Voice Connect links on-premises telephony infrastructure to the PSTN using an internet connection or AWS Direct Connect, a service that ties company data centers to the AWS cloud.
"One of the challenges for Amazon is that Chime isn't all that widely adopted," Kerravala said. "Perhaps having telephony in there will close that gap."