Telcos swap dumb pipe problem for dumb cloud

Fiona Chau
28 Jul 2011

Telecom operators must utilize their powerful differentiators in the cloud marketplace to avoid becoming “dumb clouds”, Informa Telecoms & Media warns.

The research firm said telecom operators worldwide invested nearly $8 billion to cloud-related pursuits in the first six months of 2011, but recent acquisitions haven’t yet generated decent cloud revenues.

The findings, based on Informa Telecoms & Media’s Telecom Cloud Monitor, a new analytical tool evaluating telcos’ cloud strategies, show that the typical telco generates less than 5% of its enterprise revenues from annuity cloud services.

Despite growing customer wins, some telcos need to muster 10-fold growth to hit the publicized cloud revenue targets.

“They are buying companies with datacenters and established cloud services, but who themselves aren’t making much money from cloud yet - most revenues come from hosting, not pure cloud services.” said Camille Mendler, principal analyst at Informa Telecoms & Media.

Mendler said out of the 10 acquisitions and 21 investments announced in the first half of 2011, 80% involved data centers, highlighting telcos' desire to bulk up on physical assets to sell virtual goods.

Many telcos are swapping their dumb-pipe problem for a dumb cloud: 70% of the 88 cloud services launched in the first half of 2011 were generic productivity and storage applications, often involving partners claiming a major share of the takings, she added.

Many operators are spending a lot of money just to get into the cloud game. But there is not (yet) much difference in their service portfolios looking across the global group,” Mendler noted.

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