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Guest View: Can mobile cloud pay its way?

Wendy Koh | Oct. 28, 2013
Network innovation is the key to operators’ cloud business model

There is a serious and still open question among mobile network operators looking to offer cloud-based services: is there any money to be made in these services and, if so, where?

Over the last few years, some of the largest mobile carriers across the Asia Pacific region - including China Mobile, NTT Domoco, Tata Teleservices, Telstra and SingTel - have started rolling out cloud-based services, and this will only accelerate as 4G becomes more prevalent. As most of these efforts have been focused on building a suite of X-as-a-Service enterprise offerings, should one assume that there is no revenue opportunity in consumer cloud?

The short answer to that is, of course, no. Cloud services in enterprises have been around longer. Think of Salesforce.com which really was the poster child for XaaS cloud-based service delivery. Enterprises are constantly looking to maximise IT efficiency so would naturally look to cloud-based services to do that. Operators have simply capitalised on the immediate and early opportunities that cloud offered. 

There is, however, no reason why mobile operators should not get a slice of the pie currently being enjoyed by companies that deliver service "over the top" (OTT) of networks - i.e. the likes of Apple, Google, Facebook, Microsoft, Tencent, Yahoo and a plethora of market players.  Here in Asia Pacific, the enterprise cloud market is expected to be worth $3.8 billion at the end of this 2013 [1].

While OTT service companies pioneered the cloud-based service market, it is a mistake to assume they already have it cornered. Looking ahead, say five years, the innovation we will witness around technologies like machine-to-machine communications, facial expression recognition and big data analytics, will make today's cloud services look relatively rudimentary. The opportunities around mobile "connected life" services are still huge and enterprise cloud services offer rich pickings. Add to that, arguably no one is more connected from a positioning, brand and billing perspective than the operator.

Great potential in Asia 

This potential is greatest in Asia where favourable economics and demographics, together with socio-cultural factors, mean local mobile service providers have a customer base which continues to grow in size and affluence while having some immunity from the charms of multinational OTT services. 

While the opportunity for building a strong business around cloud-based mobile services is absolutely there, network operators can't afford to wait too long in developing them or they will miss this wave. After all, their traditional revenue mainstays - voice and SMS - are beginning to melt away as IP-based alternatives come into play. For example in the Philippines, which a decade ago became the poster child for SMS, the likes of WhatsApp and Viber are now making significant inroads. Similar to the tale of ATM, frame relay, and long distance and the evolution to IP in the late 1990s, this is yet another critical inflection point for the carriers.

 

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