Over the past few years new VoIP products and services seem like they are announced daily. While this rate of innovation is exciting, it is also very confusing. How are these companies the same or different? What service should I use for my business?

These new VoIP solutions fall into one of three general categories: hosted PBX solutions, telephone API platforms or telephone applications.

Many hosted PBX solutions, such as Packet 8, Vonage or Fonality, replace your business’s premised based telephone with new SIP phones or “soft-phones” connected over the Internet to a hosted PBX system. These solutions often result in lower costs with no premise based telephone system to support and maintain. But, there are hidden costs in this model that complicate the buying decision. The best solutions require your company to install a dedicated, VoIP-optimized Internet connection. These connections are often more expensive than dedicated phone lines so some of the costs savings disappear. Since cost is most often the driver for the switch from plain old telephone lines (POTs) to hosted PBX solutions, this space has been commoditized and has become highly price competitive. This price competition is good news for your business but creates challenges for the hosted PBX companies.

Telephone APIs from companies such as Twilio and Voxeo, offer a platform where your software developer initiates and controls phone calls without purchasing equipment or telephone connectivity. The best APIs, such as Tropo from Voxeo, give your company access to a sophisticated, and highly reliable, telephony network suitable for developing complex telephone applications. Ease of use is often a selling point of these platforms, but in reality they are only easy to use for experienced software developers since they provide infrastructure and not packaged solutions. An experienced software developer may be able to code a simple phone call with just a few minutes of work using a telephone API. But building a robust, reliable telephone solution, such as dynamic call tracking, a virtual call center, or customer notifications service with retry logic and automated scheduling, requires hundreds or even thousands of hours of work. Telephone API solutions are best for companies where integration of telephone services is a core competency and where dedicated software developers are available for application support and maintenance.

Telephone application services are completely different from both hosted PBX solutions and telephone APIs. Telephone applications, from companies like Ifbyphone, provide your business with complete, ready-to-run, hosted applications that work with any telephone – business, home, VoIP or PSTN. The plug and play nature of telephone application services enable your business to measure value immediately – increased sales, reduced service delivery costs and improved customer retention. You can use these applications to manage, measure and automate phone calls that track advertising campaigns, dynamically route calls, provide customer notifications and deliver customer fulfillment or support via virtual call centers or distributed call groups. Then by utilizing an API on top of these applications your company can quickly and cost effectively integrate these ready to run applications with key business processes.

To further clarify the differences among these three VoIP models, let’s compare them to traditional web business services.

  • Hosted PBX solutions are like Internet backup services such as SugarSync or Mozy. Instead of purchasing and maintaining your own computer backup equipment, you back up your computers over the Internet to a centralized service. While you share a high-quality backup facility, you still carry the cost of the Internet connection and the desktop computers.
  • Telephone API platforms are like web hosting companies such as GoDaddy or Rackspace. The hosting company provides you a platform to build anything you want providing you have the right skills and the staff to support your custom application.
  • Telephone application services are like Salesforce.com or NetSuite. While you could build your own CRM system, most businesses choose to use an off-the-shelf CRM solution. Salesforce.com then provides APIs for integrating with their applications and a specialized environment for extending the platform (force.com). Similarly, Ifbyphone offers an API for integrating with our applications.

While hosted PBX solutions, telephone APIs and telephone applications may share the VoIP “cloud”, these three solutions are very different. Think of hosted PBXs as replacements for existing telephone systems. Telephone API platforms provide a greenfield environment for software developers. And, telephone application companies, such as Ifbyphone, provide ready to use applications for businesses looking to increase sales, improve customer retention and increase business efficiency.

By focusing on ready to run telephone applications Ifbyphone is helping thousands of company manage, measure and automate voice interaction with hundreds of thousands of customers daily.