Does it Matter? Cloud PBX vs. Hosted PBX

by Eleanor Manning (30.07.2018)

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When it comes to choosing a communication service for your business, everybody tries to look for a reliable yet cost-effective solution. Although, Voice over IP or VoIP technology has made it possible for people to do so, they still get confused by all the acronyms in the market. In fact, many people often get confused with the terms cloud PBX and hosted PBX and use them interchangeably when they not the same. They are similar in some ways, but there are so many differences between them

Hosted PBX vs Cloud PBX

The hosted PBX service is basically offered by providers who manage a physical server at their own premises. It allows users to get the services through a direct connection. In other words, they get to access complete functionality despite the fact that the server is not on their premises. However, it is important to find a Hosted PBX provider who can help you implement the system, keeping in mind the business requirements. It is different from a cloud-based PBX, which is offered through the internet. Cloud PBX does sound same as the hosted PBX, but it isn’t. The purpose of Cloud PBX is to enhance the interconnectivity and user collaboration.


When it comes to hosted PBX, you can scale a service up to a certain size and with uniform features, but cloud PBX offers more scalability and enables users to have more flexibility in features.

The choice between hosted and cloud PBX depends on the usage. Hosted PBX is suitable for large companies as it offers uniform services to company users, whereas, cloud PBX is good for small business or for personal use due to its customizable features.


Another difference between these two systems is sustainability. With cloud PBX, the service provider cannot make any prediction about the usage pattern. Although, patterns can be identified sometimes, the spikes cannot be predicted. This is why it cannot scale or anticipate any user patterns with accuracy. As a result, it can impact every user on the shared network. Hosted PBX, on the other hand, offers sustainability and allow users to identify usage patterns.


Cloud-based PBX also offers a limited storage capacity compared to the hosted PBX. For instance, a hard drive space of 500 gigabytes (divided among different users) gets filled up quickly.


The pricing of both cloud and hosted PBX is not the same. Since there is no hardware requirement in any of the options, you can compare them on the basis of cost-benefit analysis. Hosted PBX is normally built on the pay per seat model, under which a user has to pay for the capacity he would probably never utilize. It is suitable for large companies that have a big staff and require more capacity.

On the other hand, when it comes to a cloud-based system, users can make a payment on the usage basis; in other words, you pay for what you use. This system is suitable for personal use or for small businesses as they do not have a sizable staff and don’t need so much capacity.

To summarize, hosted PBX is suitable for companies that have a high capacity demand, whereas, cloud PBX is suitable for those who need it on a touch and go basis. Moreover, you cannot achieve scalability with hosted PBX and would probably have to incur a huge cost to make it scalable, whereas, cloud PBX allows you to scale your operation on-demand basis. The quality of both the systems is same; the difference arises in interconnectivity, pricing, and usability. Therefore, you must identify your needs and the usage requirement before choosing a service.

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