As mobile operators invest heavily in 4G networks, the question remains how operators will maintain profitable business models and differentiation as the demand for data consumption grows exponentially.
The demise of mobile operators by way of the dumb-pipe syndrome has been debated for many years as the intersection of mobile devices, 3G networks and the Internet disrupted a fairly predictable industry in terms of business models, time to market, and the competitive environment.
The arrival of high-speed 4G networks combined with emerging mobile cloud technology is fueling speculation that operators can recapture mobile services revenue through unique telecom capabilities and more open developer platforms and ecosystems. However, while mobile cloud is poised to be a game changer for operators, many operators do not have clear strategies and plans for leveraging the power of their 4G networks combined with mobile cloud services.
Mobile cloud market forecasts anticipate exponential growth during the next five to ten years, but securing market opportunities presents uncertainties as operators, partners and competitors all aim to control the most profitable segments of the mobile cloud services value chain.
Many operators and their vendors are focusing their mobile cloud efforts on the enterprise business market, which is expected to represent the larger and more profitable revenue opportunity for mobile operators. The opportunity in the enterprise market spans a range of horizontal mobile cloud services, along with specialized programs and services in vertical markets and cloud-enabled M2M solutions.
However, at this industry inflection point, mobile operators have to be extremely cautious to avoid fixing their ‘dumb pipe’ problem with a ‘dumb cloud’ solution by racing into commodity cloud services that provide very low margins and lack unique telecom-related differentiation.
While telecom and IT infrastructure vendors are taking different approaches to enable the operator cloud, the common theme is that the network is essential in enabling carrier-class cloud services to support real-time applications, high-value transactions and enterprise cloud services with service level guarantees. Telecom and IT vendors are focused on exposing or enabling the use of network assets and unique telecom capabilities to allow the operator and its partners to develop more robust and differentiated cloud services to compete against OTT players and public cloud providers. The key question and uncertainty for operators is defining what a carrier-class cloud platform is and what infrastructure and technology is needed to truly enable differentiated cloud services.
At the same time, Yankee Group expects that in 2012 the stormy cloud front will shift from the quandary of how to compete with OTT players to how to partner and sell OTT players differentiated telecom services, including cloud path optimization and value-added services.