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Opportunities abound on the IT front, says Canalys CEO

T.C. Seow | Dec. 16, 2013
If there's one message that the 2013 Canalys Channels Forum delegates could take away from the Shangri La Hotel in Bangkok, Thailand, it is this: the global economic crisis is over, and that channels in Asia Pacific should embrace new opportunities emerging from the IT frontier while avoiding pitfalls.

On the enterprise side of things, four companies have emerged in the technology industry: Facebook, Amazon, Apple and Google. They are consumer-facing businesses, he said, and they have achieved fantastic growths—together have grown 320 percent over the last five years, compared to just 15 percent of the traditional IT vendors over the same period. "The consequence of that lack of growth means that more and more of the big vendors moving into each other's territory as they look for growth," he said.

Cloud-led transformation
Cloud services are driving transformation in IT infrastructure. Amazon's success is changing the dynamics of the enterprise infrastructure company, said Brazier. It will do US$3.8b in cloud services this year but the next five nearest competitors together would only do US$2.4b. However, while Amazon's revenue growth is impressive, it is not profitable in this business yet—nor everybody else who has moved into the cloud space.

Brazier further added that cloud service provision market is transforming itself from specialised components to commodity components, to open source software. He cited IBM as an example of traditional vendors moving into the cloud services arena. "IBM is to move up the stack, to try and build greater value than commoditised IaaS," said Brazier. "One of the concepts that looks very interesting is community clouds, where you set up a cloud for one infrastructure for one industry that meets the financial requirements and regulation requirements of an industry you're working with, and then you can offer that service for a number of participants in that industry, with the compliance issue taken care of."

According to him, community clouds are already happening. "We're also seeing IaaS vendors trying to partner with a SaaS vendors and package those services together to rise up the stack and build through SaaS to sustain differentiation," he added, and went on to tell attendees at the conference: "When this market started, the cloud service provision market was a direct sale. That is changing. Cloud service providers have discovered if they want to reach SMBs around the world, they need the channels. So they are moving back to their partners. My message to the channels: sign up [with the cloud providers], they take the financial risks, you take a cut, and there's growth for you."

On the security side, revelations such as the those by former US intelligence worker Edward Snowden, have given rise to allegations that cloud service providers have been sharing data unwillingly with security services in the US and maybe elsewhere, in great details and high volumes. This will have an impact on cloud provision services in three ways, said Brazier, as companies trying to protect themselves against spying and information leaks. One will be a bigger push to better encryption services. Another is that cloud is expected to move towards open source. "If software is open source, then even if it's cracked or there's a backdoor to it, everyone will know about it. You may not be able to stop it but at least it's public and shared knowledge. We're seeing Openstack moving into the cloud, giving some protection around it," said Brazier.


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