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When is a Cloud Not a Cloud? Cloud Vs. Hosted

This article was updated on July 16, 2021

What is the difference between cloud and hosted?

A couple of months ago I attended Call Centre Expo and was struck by how many vendors were claiming to be "Cloud", however when you dug a little deeper you found out that actually many of them were just hosting traditional solutions and running a bit of virtualisation.

I believe that there are real fundamental differences between cloud and hosted solutions. Hosted solutions can be perfectly good and have their place, however to pretend that they are somehow cloud is just marketing spin.

So what is the real difference between cloud and hosted?

If you look at the Wikipedia definition of cloud computing you'll see several key characteristics:

  • Multi-tenancy enables sharing of resources and costs across a large pool of users thus allowing for:
    • Centralisation of infrastructure in locations with lower costs (such as real estate, electricity, etc.)
    • Peak-load capacity increases (users need not engineer for highest possible load-levels)
    • Utilisation and efficiency improvements for systems that are often only 10–20% utilised
  • Reliability is improved if multiple redundant sites are used, which makes well-designed cloud computing suitable for business continuity and disaster recovery.
  • Scalability and Elasticity via dynamic ("on-demand") provisioning of resources on a fine-grained, self-service basis near real-time, without users having to engineer for peak loads.

The main difference between hosted and cloud is multi-tenancy. Without multi-tenancy you can't get the cost efficiences of true cloud computing, and truly cost effective elasticity and reliability. (You could provide elasticity and reliability in an hosted environment, but in practice this is often not truly provided as the costs are too great without multi-tenancy).

What makes multi-tenancy so key to efficiency? There are the obvious benefits of better utilisation of physical resources but these are amplified by the greater efficiences for the Cloud / SaaS provider of only having to support a single version of software, a uniform hardware environment and the ability to be a lot more agile. Flickr deploys new software ten times a day, try doing that in a hosted environment.

The simple rule is that if a solution isn't multi-tenant it isn't cloud and you don't get all the benefits that flow from being true cloud.


  • Hosted ≠ Cloud
  • Virtualised ≠ Cloud

More reading:

Smash and Grab Semantics: Cloud vs. Hosted

Written by Vonage Staff

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