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Cloud 2.0: Strategic Opportunity for Telcos

We’re currently hard at work on a major new strategy research report Cloud 2.0: Strategic Opportunity for Telcos, and will be sharing some of the initial findings at the EMEA event in London on 12-13 June.

We’ll also be joined by some of the top practitioners in the field including Vodafone, Verizon, Orange, Amazon, and Telefonica, and will be exploring and discussing the cloud value chain in depth, reviewing the strategies of key players from all sides of the market, and putting forward options for telcos of different kinds getting into the cloud business. There’s more on who’s coming and what we’ll be covering below - please email us at contact@stlpartners.com to find out more about joining the event or participating in the research.

Background to the new research

A key hypothesis emerging from our cloud research (including Cloud 2.0: don’t blow it, telcos and Cloud 2.0: Telcos to grow Revenues 900% by 2014) and analysis from the Silicon Valley and London brainstorms, is that the cloud computing market is heading for a second wave of disruption.

Very large numbers of enterprises are still to take their first steps in cloud computing. For example, at the Silicon Valley event, Bain Consulting argued that two key groups of customers - essentially, the mass adoption phase in the classic diffusion model - are still to come, and that the size of these groups implies a very high growth rate for the sector still to come, in “Round Two”.


In parallel, key technology developments, such as OpenStack, CloudStack, and the Open Data Centre and Open Compute initiatives, are all heading in the direction of greater compatibility between providers (a round-up of links is here), a trend which is likely to reduce the apparent first-mover advantage enjoyed by Amazon Web Services, Google, et al and make it far easier to migrate between platforms.

Does ‘first mover’ advantage matter?

History suggests that first mover advantage is more often illusory than it is real.

We do not all use personal computers made by IBM, or mobile devices from Psion. However, if first movers don’t necessarily succeed in commercial terms or even survive, they do very often define technologies, standards, practices, and expectations that outlive them. You may not be using an IBM PC, but statistically speaking you probably are using a machine that conforms to the IBM PC architecture.

In this case, Amazon Web Services’ EC2 has been the default standards setter. CloudStack differs from (see comment) OpenStack specifically in that it is intended to provide API-compatibility with EC2, but the OpenStack project itself is now promising that it will implement the same APIs. Either way, the technology is settling on an analogue of POSIX, the UNIX interoperability standard from the 1980s that still defines UNIX and Linux systems now. And that’s going to be the AWS API.

At the same time, there are signs that Infrastructure-as-a-Service systems (like EC2) are currently winning over Platform-as-a-Service ones (like Google’s App Engine). As an example, Salesforce has both a developer platform (Force.com) that is closely coupled with the Salesforce CRM application, and a full IaaS product, Heroku, which it acquired as a recent startup. Heroku now supports 105,000 businesses.

PaaS solutions also have some unique advantages that may play out over time, and overall, there are plenty of potential twists and turns ahead for the cloud market.

So what’s next?

At the EMEA brainstorm, in addition to sharing a preview of our analysis of the Cloud space and telcos’ incursions into it, we’ll be joined by an excellent group of stimulus presenters who’ll also be joining in with our unique ‘Mindshare’ interactive participation format:

  • Robert Brace, Head of Cloud Services, Vodafone Group
  • Iain Gavin, Head of EMEA Web Services, Amazon
  • Alex Jinivizian, Managing Director, Cloud Strategy, Verizon Enterprise Solutions
  • Moisés Navarro Marín, Director, Strategy Global Cloud Services, Telefonica Digital
  • Peter Martin, Head of Strategy, Cloud Computing, Orange Group

Our agenda for the session covers:

  • Which customer and service segments are growing fastest (Iaas, PaaS, SaaS)?
  • What are the critical success factors to market adoption?
  • Who will be the leading players, and how will it impact sectors (provider, user, enabler)?
  • Who are the most advanced telcos today?
  • Which aspects should telcos pursue?
  • Co-opetition with IT companies
  • How much time do have telcos have?
We look forward to seeing you there, or if you’d like to contribute or participate but can’t join at this point, drop us an email at contact@stlpartners.com and let us know how you’d like to get involved.
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CloudStack is NOT a fork of OpenStack, they are completely separate projects. CloudStack is the name given to the open source project that has been recently transitioned to the Apache foundation but the codebase has come from the Citrix acquisition of Cloud.com back in July 2011. The architecture is based on the Java programming language.
OpenStack is a separate open source project started by Rackspace and NASA back in 2010. The project is based on the Python programming language


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