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Telecom’s misty future?
 Honolulu - special to the IIC. “I have a five year child who likes to look at clouds ...he understands them,” says Ken Zita.” I am not sure I do.” The cloud – a delocalized construct which infrastructure and platforms are merely services along with services and applications themselves to be brought on demand to users – may be the future of the entire information sector.
Certainly, some straws are in the wind, says Mr Zita, President of Network Dynamics Associates, a US consulting company.” We are seeing [communications] innovation coming not from the network providers [any longer] but from somewhere else.” He continues: “Bandwidth is not the money maker it used to be, but services are and there is a decoupling of innovation from the network itself to other places in the network we call the ‘cloud’.“ In his view, this cloud may well be composed of shared platforms, virtual platforms, and data centers, which become strategic fulcrums to future services, but by extension he argues the traditional telecom sector may be at a disadvantage: “the IT world has a stake in the cloud and maybe they are better placed that the network providers are.”
Mike Hill, VP of Enterprise Initiatives at IBM agrees that big changes are in progress and that cloud computing itself will be one of the three mega changes in the history of IT (the first two he says were the move from stored program to mainframe computing, and the move from mainframes to client-server models). “Each made access much easier for users, but also reduced the costs of access,” says Mr Hill.
Mr Hill continues:”Whenever you get that [change] you get new opportunities formed. Cloud is coming straight out of the consumer side of the industry and it is being very rapidly followed by the enterprise sector, but we are still in the early adopter stage. And this creates new opportunities and different models for all of us…the challenge is to figure out how to play them.”
Good scenario, bad scenario
But Mr Hill disagrees with scenarios that make cloud a necessarily bad thing for telcos: “For most services, most of the cost comes in the network and, given the position, that service providers typically have with their clients, if they play it right, they can do very well.” Ken Zita remains unconvinced that telcos could have a big future in this upcoming environment: “in my experience, telcos are relatively clueless [about business strategy] above the transport layer.”
Peter Coffee, Director of Platform Research at Salesforce.com, agrees with the ease-of-use argument and predicts a period of proliferation and experimentation. Setting up a collaborative activity over a network used to be a “formidable” challenge, he says, by way of example, “now it is not”. He says that “more stuff will get used because of this opportunistic access…people will do ten things now even if only one is likely to succeed” because the risks have been significantly lowered.
But it is not merely an outsourcing proposition, says Mr Coffee, but rather huge leverage on asset use with cloud application providers potentially able to deliver savings of 95% over traditional implementations. But Mr Coffee says, it would be wrong to consider the potential as just an information resource: “People are drowning in information , they want to take action, so cloud-based activity should rather be “a medium for decision and action rather than information.”
But the way the industry works may ultimately be very different from what it is now, says Ken Zita. “Now, service innovation no longer comes from a vendor.” For Peter Coffee, the innovation context is the iPhone/App Store model which has demonstrated that applications can be prolific, accessible on demand and delocalized. “Telecom services are competing with Fodor’s guidebooks for providing information…this is clearly not about the bandwidth you are delivering but about the experiences you are enabling.”
There will be many players in the market, says IBM’s Mike Hill. “We had to learn - in the IT industry - that with many projects you should never go it alone and at the same time you have to work out how to add value to your ecosystem. He says telcos would be wise to do the same.
- Stephen McClelland
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