As telecom providers begin to enter the cloud computing market, they will certainly begin to make waves in the industry and affect the smaller players—meaning, you. By Colleen Frye
September 27, 2011
By Colleen Frye
Agatha Poon is research manager for global cloud computing at Tier 1 Research. She told writer Colleen Frye that the entrance of telcos to this market and how it will impact smaller players is a dynamic she is tracking.
ChannelPro-SMB: What trends are you following in the cloud market?
Poon: We’re seeing the telecom providers getting into the cloud space, which is an interesting market dynamic. I would consider telecom providers late in the game compared with the early Internet heavyweights like Amazon or Rackspace. It seems they’re positioning themselves differently than a Rackspace—more like an enterprise-class cloud offering. It will be interesting to see vs. the commodity cloud targeting SMBs.
Another area I’m watching is partnering. When you get into the cloud space you need a lot of partners—partnering with management software providers, monitoring software providers. So the cloud ecosystem is getting bigger and bigger; it’s not just storage or CPU. So in how to differentiate themselves, the partner ecosystem will a play a crucial role in driving market evolution.
With telecom, we see a lot of Asian providers working with systems integrators and MSPs to present an end-to-end cloud solution. Traditionally, a lot of telecoms don’t have skills in the IT area; they’re more communications, network services. We see a lot of synergy between SI and telecom, especially in Asia.
ChannelPro-SMB: How will the telcos in the cloud market affect smaller players?
Poon: We always think smaller guys will have to adapt to different market situations. Will they lose business with the big guys stepping out? They tend to focus on niches, like storage for a vertical, like records for healthcare industries. They can go into a niche market. I do not necessarily see them in a disadvantageous position. There’s opportunity for everybody.
I always think [the telcos] are in a good position, because they own the network. They have a well-established enterprise marketplace. They can reach out to existing customers to encourage them to use the cloud. Something that holds them back is they’re trying to figure out the right approach—should they just go to the cloud or focus on using it for complementary services?
Especially for smaller players, even resellers and VARs, [they should focus on] where they can add value. They know the market well, they know the customer well, they can do a lot of customization. Typically what we see when a lot of VARs get into the cloud space is [they] work with the big guys; use their services and customize them to fit your customer profile. They are adding services on top of a generic cloud offering.
ChannelPro-SMB: Are providers making money with cloud yet?
Poon: There’s a lot of talk, but they’re not making money yet; so [the challenge is] how to convince stakeholders to pursue something quite uncertain. [Telcos] tend to be conservative and slow to respond to market situations, but they could have an impact. Will they have a big share? It depends on the company, the corporate strategy. I still think they’re conservative in pursuing a strategy around the cloud. [Looking ahead], Tata Communications expects to generate $200 to $250 million from its cloud offerings by 2014. Its cloud offerings include a mix of IaaS and SaaS services.
ChannelPro-SMB: Are cloud services and managed services converging?
Poon: A lot of managed hosting providers are doing that, but the goal for them is not providing cloud, but managing a cloud platform for their customers. The most sophisticated offering you can have is to manage a cloud platform for customers, which includes security, integrating different applications, or migrating applications to the cloud platform. It’s a hybrid model; a different type of managed services that will be available to customers.