Telcos need to do much more to gain significant cloud market share
Synergy Research Group said that the global cloud computing and storage market grew 24% annually for the period ending September 2017. The market research firm said that of the six cloud services and infrastructure market segments, operator and vendor revenues, IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) had the highest growth rate at 47%, followed by enterprise SaaS (Software as a Service) at 31%, and hosted private cloud infrastructure services at 30%.
Data suggested that 2017 widened the gap between cloud services spending vs. hardware and software used to build public and private clouds. Synergy noted that 2016 was the year in which spending on cloud services overtook spending on cloud infrastructure.
John Dinsdale, a chief analyst and research director at Synergy Research Group, noted that in 2015 cloud became mainstream and by 2016 it started to dominate many IT market segments.
“Major barriers to cloud adoption are now almost a thing of the past, with previously perceived weaknesses such as security now often seen as strengths. Cloud technologies are now generating massive revenues for cloud service providers and technology vendors and we forecast that current market growth rates will decline only slowly over the next five years,” he concluded.
The researcher noted eight cloud services vendors were among the 2017 market segment leaders.
Figure 1: Movers and shakers in 2017 cloud market
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Over the period Q4 2016 to Q3 2017, total spend on hardware and software to build cloud infrastructure approached $80 billion, split evenly between public and private clouds, though spend on public cloud is growing more rapidly.
Infrastructure investments by cloud service providers helped them to generate over $100 billion in revenues from cloud infrastructure services (IaaS, PaaS, hosted private cloud services) and enterprise SaaS – in addition to which that cloud provider infrastructure supports internet services such as search, social networking, email, e-commerce and gaming.
Meanwhile UCaaS (Unified Communications as a Service), while in many aspects is a different market, is also growing strongly and is driving some radical changes in business communications.
Carriers, for their part, are not standing still. According to Gartner Group, communications service providers (CSPs) worldwide face profound challenges related to traditional telco network-based to cloud-based service delivery across several functional and technical domains.
Gartner research director Martina Kurth said “CSPs are embarking upon an evolutionary path that unifies cloud instances of SDN/NFV, OSS/BSS (e.g. Paas/SaaS/Iaas) and enterprise IT. Coupled with microservices, container based service design principles and cloud integration services, CSPs endeavor to create synergies between their various cloud domains and drive flexibility and agility across their cloud deployments.”
Gartner predicts that vendors which are well positioned in the end-to-end Telco Cloud stack market, are also likely to take market share in corresponding future network and/or IT technology markets such as digital technology platforms and ecosystems, Data/AI, IoT and 5G.
Gartner Group says that a fully integrated, interoperable, cloud and virtualied telco protocol stack will pave the evolutionary technology adoption path from SDN/NFV to network slicing to 5G and IoT in the future. But no time frame was given for that to be realized.
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The importance of ‘cloudification’
There is an estimated £3.35 trillion in value to be unlocked across enterprise use-cases over the next five years, across finance, manufacturing and retail, to name but a few. The ‘cloudification’ of networks will play a key role for telcos looking to access these new revenue streams. ‘Cloudification’, or the ‘telco cloud’, is defined as “a software-defined, highly resilient cloud infrastructure that allows telcos to add services more quickly, respond faster to changes in demand, and centrally manage their resources more efficiently.” The telco cloud means a shift from providing network functions, to providing a platform that enterprises can build and innovate on.
As the needs of a diverse range of customers rapidly evolve, so too must the telcos themselves – deploying software at a matching pace. The cloudification of the network is helping to make the scalability of applications easier, opening the door to new services and helping deliver innovation to enterprise customers at the rate they now expect.
However, it’s important to remember that real cloudification is about far more than simply transferring network functions from proprietary hardware to software running on commercial, off-the-shelf, hardware in the same locations. It is about opening the network architecture to facilitate diversity, from network-in-a-box to networks running entirely in the public cloud – and every combination in between. The advantages of an open approach are vast, and the momentum behind merging telco and IT operations is growing.
https://telecoms.com/opinion/for-5g-to-succeed-telcos-must-adopt-a-software-mindset/