Service provider consolidation is on the horizon as the big play in the future will be providing hosted IT services, which includes hosted data centers, said Doug Wills, Juniper Networks’ senior director of Junos and SDN.
“The telcos see what Equinix and AWS are doing and say ‘we need to be in that business.’ It’s been a wake-up moment for telcos,” Wills told a group of analysts and journalists last week in Singapore.
“Amazon has made some big bets on this. Jeff Bezos sees the hybrid cloud infrastructure for enterprises like electricity 100 years ago. This is just the early days.”
A big advantage of the data center space, unlike telecom, he noted, is it’s not regulated.
Regarding consolidation, Wills said most cloud experts envision three waves of changes. First, data centers are consolidating as Fortune 500 businesses spend billions of dollars annually to consolidate their smaller data centers into large cloud infrastructures, allowing enterprises to shed enormous IT costs.
“Second, service providers are consolidating. Traditional telecom providers are shedding fixed-line assets to reinvest in mobile and cloud infrastructures (e.g. SingTel, Vodafone, Verizon). This activity is driving a new wave of network upgrades, industry consolidation and shifting capital spending priorities across all geographies.”
Third, he said, many software and hardware vendors are reinventing themselves, investing in IT or network services as a hedge to first protect, and then grow, their traditional software and hardware businesses (e.g. IBM, Microsoft, Oracle).
“Each of these changes may prove very disruptive, as the cloud economics reshape the futures of many businesses over the next decade.”