Why Cox Is Cautious on Clouds

Are small businesses ready to join the rush to the cloud?

Cox Communications Inc. doesn't think so and that's a major reason that the company, usually an early tech adopter, hasn't been the first to offer cloud-based services. (See Cox Launches 'Landmark' Biz Services Campaign, Cable's Newest Billionaire: Cox Business and Cox Finds Ethernet Success in Verticals.)

It's not alone in that thinking. XO Communications Inc. offers cloud services for larger enterprises, noting that SMB customers just aren't looking for wide varieties of hosted, network-based services. Verizon Enterprise Solutions , on the other hand, has built a diverse cloud portfolio that includes low-end products aimed at competing with Web-based cloud players such as Amazon. (See XO Launches Cloud Comms and Verizon Takes On Amazon With SMB Cloud Offer .)

Cox isn't ignoring the trend toward outsourcing of telecom and IT services, having developed managed services such as online backup, partnered with Mozy, and managed security, teamed up with McAfee Inc. (NYSE: MFE). (See Cox Business Takes Managed Security Nationwide and Cox Biz Taps Mozy for Backup.)

But for the 80 percent of Cox's target business customers that have fewer than 20 employees, these are specific services with specific benefits and not part of a broader service trend toward cloud, says Roger Crisman, director of data and video product management for Cox Business.

That doesn't mean Cox doesn't hear the buzz around cloud, particularly from its larger customers -- and from vendors like VMware Inc. (NYSE: VMW), who would like to sell Cox its services.

"You hear the buzz -- it's in the press," Crisman says. "But we would see cloud services as a piece of managed services that falls under our general overarching strategy of trying to provide SMBs with telecom solutions that keep employees connected and maximize productivity."

That managed services strategy includes voice services such as managed PBX offerings and a move to IP Centrex in the future, Crisman says. Cox also offers data network and design and is moving into managed customer routers and networks, to complement its hosted messaging products. In Virginia, Cox is testing a Microsoft Corp. (Nasdaq: MSFT) Exchange hosted service.

"We also have Web hosting, although that is not a real robust service at this point," Crisman says. "Our security suite in partnership with McAfee and the online backup with Mozy -- those are integrated into our Cox Business and My Account customer portals with single sign-on, and those are services with really robust features and administrative capabilities. But we have not pursued a large catalog of software-as-a-service features because that is not what our customers are seeking right now."

The McAfee-based security offering is client-based security with updates from the cloud, but it is one part of an evolving security strategy that will next take Cox back on premises, as part of a unified communications offer that will combine firewall with managed PBXs, in partnership with Cisco Systems Inc. (Nasdaq: CSCO) and using its Cisco Unified Communications 500 Series for Small Business platform.

"We are looking to go beyond the point of demarcation into the customer's network a little more," Crisman says. "On the consumer side, we launched Cox Tech Solutions, a desktop and LAN management service that we are considering for business as well."

— Carol Wilson, Chief Editor, Events, Light Reading

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