Stop aping Amazon, start boasting

Stop aping Amazon, start boasting

Camille Mendler  |   February 14, 2011
Informa Telecom & Media
The awful truth: Telcos have just replaced one big problem with another.
For the majority, generic,"dumb" cloud services dominate. What's to differentiate them from each other, or indeed, from their non-telco competitors?
Take a guess. Once the cloud's digital assets are interchangeable, the only real differentiator becomes price. And pure-play cloud providers like Amazon Web Services and SpotCloud are already trading virtual machine instances, fuelling a cloud commodity market.                                 
Telcos have walked this path before. Remember the perilous promise of DWDM during the '90s fiber frenzy. Lowering the marginal cost of producing new bandwidth did stimulate market demand. But rising demand could not safeguard net profitability against dramatic price declines during hyper-competition.
Today, patterns of digital consumption are far more complex.
Yes, as Cisco reminds us, video will dominate traffic. And as Amdocs, Ericsson and Informa forecasts opine, we face a multi-billion device reality.
But I conclude that telcos have barely mapped the complex moving parts of a true telecom-grade cloud delivery ecosystem - nor invested appropriately to capitalize on it. While few exceptions - AT&T, BT and Orange Business Services come to mind - there's minimal substantive differentiation in telecom cloud services. Nor concerted attention on serving vertical communities like financial services, health or pharma with specific security, compliance and management needs.
That's a wretched waste of an extraordinary opportunity. As I've stressed before, the integrated telco should be king of the cloud. The infrastructure assets required to secure just-in-time consumption of cloud services - irrespective of device, platform or location - lie in telcos' control.
Let's be totally clear: Global diffusion of cloud computing depends more on telecom than IT assets.
Stop aping Amazon: Telcos must emphasize their multi-device and multi-platform cloud service delivery and support capabiliities;
Start boasting: Telcos must stress their enormous investment and skills in security and service level management, and market integrated, end-to-end cloud SLAs;
Support communities: Telcos must stop focusing on generic cloud services, and construct unique areas of differentiation and margin stability by serving verticalized industry needs.
Camille Mendler is principal analyst and head of enterprise verticals at Informa Telecom & Media
Camille Mendler


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