Telco Cloud. Cloud & Infrastructure. Can telcos compete with the heavyweights? M14132MRA October 2014
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1 Cloud & Infrastructure Telco Cloud Can telcos compete with the heavyweights? M14132MRA October 2014 This report is part of our Cloud & Infrastructure series which in 2014 includes: - -an Excel database, updated annually - a state of the art report in PowerPoint, updated annually - four in-depth reports in Word, with a summary in PowerPoint - preferred access to our Network infrastructure experts
2 Author: Julien GAUDEMER, Consultant, Internet & Services Julien joined ldate in September 2011 as a consultant in new internet technologies and services, specialising in network infrastructure, internet technologies and new mobile services. His work has included reports on mobile advertising, cloud computing and NFC (Near Field Communication) technologies. Before coming to IDATE, Julien worked as a Project Manager in Bouygues Telecom s network operations division in Paris. Julien holds an engineering degree from the Institut Supérieur d Electronique of Paris where he specialised in telecom infrastructures and services (wireline and mobile networks, NFC, etc.), in addition to having studied management and innovation economics at the University of Chalmers in Goteborg, Sweden. j.gaudemer@idate.org About IDATE and the DigiWorld Institute IDATE s teams of specialists have earned us a global reputation for reliable tracking and analysis of telecom, Internet and media markets since Now, with the support of our members, which include over 40 of the digital economy s most influential players, the newly rebranded DigiWorld Institute has entered a new era, focusing our development around three main areas of activity: IDATE Research, a catalogue of publications IDATE Consulting, bespoke analysis and consulting solutions DigiWorld Institute, a digital economy think tank. For more information about us and our reports, contact: Isabel Jimenez Tel: +33 (0) Fax: +33 (0) i.jimenez@idate.org Copyright IDATE 2014, CS 94167, Montpellier Cedex 5, France All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system and transmitted in any form, including electronically, without the prior written permission of IDATE. IDATE and DigiWorld are international trademarks of IDATE
3 Table of contents 1. Executive Summary The cloud: still a fast growing market The cloud: challenges for telcos Different strategies for the market leaders Entering the market through different channels New distribution channels Methodology & definitions IDATE s general methodology Methodology specific to this report Main concepts Cloud computing Infrastructure as a Service IaaS and server collocation Platform as a Service PaaS Software as a Service SaaS Communications as a Service CaaS The public, private and hybrid cloud Distributing cloud services Direct distribution Wholesale distribution Cloud brokering Data centre Key market factors and critical development variables Flexibility, agility, interoperability Pay-as-you-go billing Public authority involvement Data protection and privacy Service Level Agreements and Quality of Service Cloud markets The IaaS market Size of the market Market structure and ecosystem Outlook The PaaS market Size of the market Market structure and ecosystem Outlook The SaaS market Size of the market Market structure and ecosystem Outlook IDATE
4 4.4. Wholesale distribution Market structure and ecosystem Outlook Cloud brokering Market structure and ecosystem Outlook Private/hybrid cloud Top cloud company strategies IT company strategies Microsoft IBM Rackspace OTT company strategies Amazon Google Cloud broker strategies Jamcracker AppDirect Telco strategies Sprint Verizon KPN Belgacom Orange Business Services Telefónica Deutsche Telekom Telcos place in the cloud market Telcos vs. OTT vendors Telcos major competitive advantages Different positioning from OTT vendors Various distribution channels Why the cloud is good for telcos Strengthen customer relations and satisfaction New revenue opportunities Possible new services IDATE
5 Tables & Figures Table 1: Top 9 most popular public clouds Table 2: Top IT companies cloud strategies Table 3: The top OTT companies cloud strategies Table 4: Overview of cloud broker strategies Table 5: Overview of telcos cloud strategies Table 6: Sprint s main cloud services, and associated partnerships *** Figure 1: Growth of the global enterprise cloud computing market by segment, Figure 2: Growth of enterprise cloud revenue by type of player, Figure 3: The different cloud architectures Figure 4: Overview of the different means of distributing cloud services by and to telcos Figure 5: Cloud computing: benefits and challenges for businesses Figure 6: Telcos reasons for adopting cloud computing solutions Figure 7: Cloud computing adoption by region Figure 8: Industry adoption of cloud computing, by sector Figure 9: IaaS and private cloud hosting solutions used by businesses Figure 10: Global IaaS market growth, Figure 11: Global PaaS market growth, Figure 12: Most widely used cloud applications (today and within 18 months) Figure 13: Global SaaS market growth, Figure 14: Private cloud usage Figure 15: The different public cloud services sold by Rackspace Figure 16: Growth of Amazon s other revenue, including income from Amazon Web Services Figure 17: Location of Google data centres worldwide, in Figure 18: Jamcracker marketplace solution Figure 19: AppDirect marketplace deployed by T-System Figure 20: KPN s Open Cloud Store platform Figure 21: Main IaaS cloud solutions sold by Orange IDATE
6 Companies covered in the report Cisco CloudBees Dell EMC eyeos Google IBM Joyent Lotus OBS (Orange Business Services) Oracle OVH Pivotal Salesforce SoftLayer Standing Cloud Telindus Terremark Verizon Vodafone Cloud Foundry CSC Deutsche Telekom Engine Yard GoGrid HP Jamcracker KPN Microsoft OpenLogic Orange Parallels Rackspace SAP Sprint Telefónica Telstra T-Systems VMware IDATE
7 2. Methodology & definitions 2.1. IDATE s general methodology The approach adopted by the IDATE team of analysts and consultants is based on the combination of several methods: Field research and validation of field research data; Conventional tools used in industry and market analysis: segmentation, competition analysis, strategic strengths, modelling and assessment and forecasts, amongst others; Expert analysis of field specialists and their professional network partners. More specifically, IDATE avails of the following human resources and tools: 1/ A multidisciplinary team of full-time consultants, specialised by business sector IDATE analyses are performed primarily by our in-house consultants, and very occasionally by freelance market analysts. This approach capitalises on our pool of expertise through teamwork, and the constant sharing of knowledge, ideas, contacts, viewpoints and key data. Each report is drafted by a team of specialists under the direct supervision of senior consultants who are recognised experts in their field. 2/ Primary and secondary research IDATE reports and databases are based on primary data obtained from first-hand interviews with the sector s decision makers and on secondary data assembled from public sources and external databases. 3/ An integrated information centre sustained by a number of tools and proprietary databases Over the course of 30 years, IDATE has developed proprietary work methods, data structures and databases that trace the history of major developments in the sectors under study. Companies: The IDATE in-house data service tracks the latest news and events concerning the leading telecom, Internet and media industry companies around the globe. Innovative firms and startups are monitored by the market experts in the different Practices. Markets: IDATE databases are developed using rigorous methods to process major economic indicators (GDP, investment, exchange rates and demographics) and relate them to influential sectoral and national factors such as CAPEX and national market dynamics). Technologies: IDATE has a practice-based organisation structure which enables us to track innovation efficiently. IDATE engineers ensure an in-depth understanding of the changing shapes of products and services and of the latest innovations in the marketplace. 4/ Contents of published reports Each IDATE market report details the structures and issues at play in the market under study, the driving forces (technologies, regulation, and consumption) and the players involved. Particular emphasis is placed on market assessments and forecasts, which are developed within the framework of a core scenario. Every market report features a clear and concise presentation illustrated with tables and graphs of key market data and trends. The drafting process of a market report is based on the following steps: analysis of the information available in the in-house databases, and review of analyses performed in the recent past; IDATE
8 based on a preliminary segmentation and assessment of the market, and as part of an validated interview guide, analysts conduct interviews that enable them to validate working hypotheses; a market model is then developed, to enable testing of the hypotheses which impact market development, and the model is validated after a new round of interviews; and, finally, report conclusions are debated within the team responsible for the project and with expert consultants from the various fields involved; proofreading and editing/revision processes, prior to the editing of the final version of the report which is delivered to the client Methodology specific to this report This report focuses primarily on telcos, while also situating them in the cloud computing market s various B2B segments, which include the Internet giants and veteran IT service companies. The following segments are examined: Infrastructure as a Service IaaS Platform as a Service PaaS Software as a Service SaaS Communication as a Service CaaS (telcos only for the purposes of this report) The report does not examine the B2C (i.e. consumer) market for cloud computing, which includes online personal cloud and cloud storage solutions for consumers. Market figures are provided for each market segment, except for CaaS. They are based on the sector s largest players, and on the global IT services and software markets the latter of which includes SaaS. IDATE
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