& cplSiteName &

The Myth That Telcos Can't Do Cloud

Caroline Chappell
10/3/2013
100%
0%

There is no shortage of Cassandras predicting that operators will never make a decent fist of selling cloud services to enterprises. They point to the fact that operators don't have the right organizational and go-to-market structures, that telcos under-invest in cloud platforms compared to the Internet giants and that they lack the software skills to build the innovative capabilities required.

One of the loudest critical voices belongs to IBM Corp. (NYSE: IBM), although this is somewhat surprising since IBM's acquisition of SoftLayer in July this year is a tacit admission that even this experienced software player failed to build a successful cloud provider platform using its stable of repurposed, enterprise-grade Tivoli automation tools.

IBM's SmartCloud Enterprise will become a "skin" running on top of SoftLayer to protect existing cloud customers' investment: New customers will be put straight onto SoftLayer. SoftLayer is a pretty impressive cloud fabric designed from the ground up several years ago, so it's understandable that IBM bought it, reportedly against stiff competition from EMC Corp. (NYSE: EMC)/ VMware Inc. (NYSE: VMW).

But evidence is mounting that certain telcos are making good headway with enterprise cloud and are winning business from the likes of Amazon.com Inc. (Nasdaq: AMZN) and IBM. They are investing significantly in cloud, whether by acquiring cloud technology companies themselves, recruiting large numbers of skilled software developers, and/or network-enabling their clouds in interesting ways. Like IBM, they have had their first- and even second-generation cloud failures. But, as a result, they understand what the pain points of cloud operations are and have accepted that they will have to control cloud technology integration and develop certain capabilities themselves rather than depend on third-party cloud enablement systems and tools.

None has yet gone as far as Verizon Communications Inc. (NYSE: VZ), which has unveiled its next-generation cloud platform today. Verizon Cloud Compute features a novel, Verizon-developed software-defined networking fabric, an in-house extended open source hypervisor and a simplified hardware platform. (See Verizon Launches New Cloud Service.)

But what other leading providers, such as BT Global Services , CenturyLink Inc. (NYSE: CTL) (Savvis), Colt Technology Services Group Ltd (London: COLT), and Interoute Communications Ltd. have in common with Verizon is an emphasis on the cloud orchestration layer and the need to take a holistic, "fabric" approach to cloud management with an integrated view of the entire cloud environment.

Advanced telco cloud providers recognize that enterprise business is going to be won or lost on the strength of their orchestration layers. That is, on how unified their orchestration capabilities are, and how able they are to orchestrate the simultaneous and distributed fulfillment of multiple components in a cloud services bundle -- for example, dedicated or shared IaaS, networking services (VPNs that span both LAN and WAN), communications services, security services (virtual firewalls, identity servers etc), and enterprise applications.

In addition, factors such as how much self-service control their orchestration layers give customers in choosing what their cloud environments look like, how services are configured, where they run, and what failover policies are in place, are key to gaining enterprise trust. The level of management granularity that the orchestration layer provides to communications service providers, so that they can continue to innovate in terms of the features and business models they can offer to enterprise customers, is also a critical factor.

The fact that orchestration layers demonstrated by the leading telco cloud providers are becoming increasingly rich and capable is a good sign, although a gap is opening up between those that are investing at the cloud cutting edge and those telcos that either don't have, or don't want, to acquire the development capabilities required. IBM plans to target such telcos as resellers for SoftLayer and telco cloud providers will benefit from the wholesale opportunity too.

But first, there is still some way to go, for any type of cloud provider, to persuade enterprises to come on board.

— Caroline Chappell, senior analyst, Heavy Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
10/3/2013 | 1:00:28 PM
Enterprises warming up?
I've spoken with multiple folks here at ESDN who say that enterprises are (finally) warming to the cloud concept, so it will be interesting to see what the next year brings. I have heard this (things are getting better) story before, but this is an excellent explanation of what's changing in carrier cloud.
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
10/3/2013 | 12:14:27 PM
About time!
Getting to gips with the cloud as a service enabler and as an important tool has been critical for carriers for years -- and yet they are just starting to show signs of getting it right? That's not very encouraging for teh CSP comunity, in my view... with the network at the finger-tips they should be killing this market by now...
More Blogs from Heavy Lifting Analyst Notes
NICs have evolved many times, and the smart NIC is the next step, offering a programmable resource that can be configured to provide additional CPU offload functions for different applications.
Operators are applying artificial intelligence and machine learning technologies to leverage the power of their new programmable, software-based networks.
This year's show evinced healthy interest in effectively using data and analytics to run telecom businesses better, but how well are operators actually doing with it?
FTTx rollouts need a more automated process for collecting and analyzing test results, and analytics could provide the answer.
Driven by web-scale Internet companies, three key trends – disaggregation in terminals, open line systems and 100G+ transponders – are reshaping the DCI market.
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 30, 2017, The Westin Times Square
December 5-7, 2017, The Intercontinental Prague
March 20-22, 2018, Denver Marriott Tech Center
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
SmartNICs aren't just about achieving scale. They also have a major impact in reducing CAPEX and OPEX requirements.
Hot Topics
When Will 6G Arrive? Hopefully Never, Says BT's McRae
Iain Morris, News Editor, 11/21/2017
Let's Talk About 5G Efficiency, Not Wacky Services
Iain Morris, News Editor, 11/21/2017
Juniper's New Contrail VP Hails From Google
Craig Matsumoto, Editor-in-Chief, Light Reading, 11/15/2017
AT&T's Lurie Leaps to Synchronoss as New CEO
Dan Jones, Mobile Editor, 11/17/2017
Wireless Could Arrive Soon in NYC Subway Tunnels
Dan Jones, Mobile Editor, 11/20/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives