February 11, 2011
Big telecom companies have traditionally been late to market when it comes to introduction of emerging technology, preferring to let other, smaller companies absorb the first-to-market risks associated with launching game-changing services and solutions. Historically, the “wait and see” - only moving when there is clear market acceptance approach - has worked for these mass group of telcos.
In the 90’s, for example, when small and mid-size companies rushed to market with VOIP solutions, the telcos lagged behind. It wasn’t that they didn’t see the value of VOIP – it was more that they saw the threat.
They had the ability to introduce VOIP solutions overnight, but couldn’t risk rapidly cannibalizing their existing revenues...
They had to milk their base for all they could, slowly allowing prices to drop and minimizing the pace of revenue loss until they had no choice but to enter the market....
They lost share, but preserved cash flow and profitability along the way, and bought the time they needed to enter new markets like mobility to offset revenue loss elsewhere.
And when they finally did enter the world of IP Networking, they did so with a bang...quickly dominating the market and becoming the leading providers of VOIP solutions.
The telco strategy shifted a little in the 2000’s as emerging technologies posed lesser threats to their embedded revenue base, and presented greater opportunity for new sources of revenue. The co-lo business is a good example of this. The telecom companies weren’t first to market, but they followed in a hurry and quickly carved out a very large niche with telecom co-location data centres popping up everywhere, and rapidly being filled as customers flocked to the brands they’d trusted for years – like AT&T, Verizon and Qwest.
Now as this millennium has its teen years in sight, the telcos haven’t quite reached the stage where they’re considered “early adopters” but there’s ample evidence that suggest they have come a long way from their “wait and see” days when it came to new service introduction.
What’s driving this? The cloud and the global race to see who will emerge as the dominate players in this multi-billion dollar market that will permanently change the computing landscape.
Really Fast Followers or Leading the Way?
The world’s giant service providers are all staking their claim in the cloud - some with what can only be described as “brochure-ware” solutions which they hope will buy them time to bring cloud services to market, and other with real offerings that are gaining market momentum. And who’s right there with the big guys – the IBMs, HPs, Symantecs and Sungards of the world? The telcos, many of whom are making a strong statement that they are going to be in this game from day one.
In August, 2010, I blogged about Qwest’s entry into the cloud being a signal that the telecom sector was mobilizing, and that as they did, the cloud would migrate from a computing option, into a mainstream technology and a driving business force. Well, here we are in the first few days of February 2011 – the equivalent of about 5 cloud years later (remember Internet years?), and the telcos have not only mobilized, they are armed and ready to attack the cloud market from every corner of the planet.
And there is ample evidence of this from announcements made just in the last few weeks.
And that’s just the news that’s public. The really big stuff hasn’t even fully bubbled to the surface. But it will, and soon.
Last week I had a conversation with a senior executive at a big-name global company that has a presence in every major market. My contact owns the telecom sector worldwide, and had just returned from a two-week trip to Asia where he’d met with senior telecom leaders in Korea, Japan and China. What was on their minds? The cloud. And what was on my contact’s mind? How his company can layer cloud services – onto its current offerings to enrich its telecom services suite.
We discussed what’s developing within the telecom sector in other parts of the world, and to quote my prospective business partner, “Every telco that I handle is either at the cloud architectural planning or proof-of-concept stage.”
The cloud rush is on, and it’s no longer a one or two team race to the finish line to see who can claim the number one spot. The traditional “big boys” have some new players to contend with, ones with deep pockets, strong, trusted brands, and massive embedded customer bases.
I can hardly wait ‘til we reach the 20’s. Imagine...telcos as “early adopters.”
Posted by Joshua Geist - February 11, 2011 @ 8:19 AM, Pacific Standard Time
Joshua Geist is the founder and CEO of Geminare Incorporated, an innovator in cloud-based enablement technologies for the Recovery as a Service market. Combining a degree in Physics with over 20 years of technology experience, Joshua's passion lies in solving technology challenges for the mid-sized business market.
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