Telcos Tap Into Cloud Platforms
For telcos, the cloud opens up a direct channel to sell software to the enterprise, but it's a new and complex field.
Developing the services and attaining the skills to meet the demands of enterprise users is challenging, but that's where cloud services and platform providers come in. Gartner Inc. predicts this fast-growing segment will account for 20% of all cloud service usage in 2015, compared with 5% in 2013.
It's becoming a popular way for operators to reach out to business customers. The latest to join the party is Telstra Corp. Ltd. (ASX: TLS; NZK: TLS), which says its new apps marketplace for SMEs is designed to remove "the complexity out of choosing and managing apps from different vendors."
AppDirect, founded in San Francisco five years ago, is one of the largest of these cloud middlemen. Richard Dufty, vice president of worldwide sales at AppDirect, says the business was created to bring together "buyers and sellers from two different spectrums who could not get access to each other."
Emerging software players such as Box and Dropbox struggled to reach the user, small businesses didn't know about the technology or how to get it, and telcos and the software players didn't talk the same technology language, he explains. "The one piece missing in the middle was the service provider."
Dufty said prior to joining AppDirect, his job at Norton Symantec involved doing integration work with US telcos to help them sell software. "Every single one of those individual integrations with telcos would often cost the joint parties more than $500,000 just to have the integration happen."
Dufty said the AppDirect platform can get up and running in less than 12 weeks, offering a catalog of more than 250 applications, usually with anchor apps such as Office 365, Box, WebEx and DocuSign, as well as local software.
He says telcos see a boost in the revenues they derive from the sale of apps as well as their own services, and also see a reduction in churn.
Helping to build more efficient bridges between apps and their potential business users has helped AppDirect attract customers, attention and funding. The company raised $35 million in April this year to take its total funding to more than $55 million and was recently named the San Francisco Bay Area's third fastest-growing private company and fastest-growing private tech company by the San Francisco Business Times.
Gartner Research vice president Gyanee Dewnarain says platforms from AppDirect and competitors such as Jamcracker Inc. and Parallels Inc. offer telcos the "supermarket model." (See CinciBell Builds Parallels Cloud and Jamcracker and CommVerge Partner to Deliver Cloud Services Brokerage Solutions to Telecom Operators.)
"You have premium brands, you have low-cost brands and you have your own brand. This is the approach telcos are taking."
As in a supermarket, a customer can choose between a big brand such as Symantec or Microsoft 365, a local ISV (independent software vendor) brand that is "similar to what the big guys offer but less expensive," or perhaps the operator's own branded application.
For software developers, these platforms mean they don't have to manage relationships with multiple operators while, conversely, telcos don't have to run big developer programs.
The downside for telcos is differentiation. If your competitors in your market are also white-labeling the same platform, "you will have two identical marketplaces," Dewnarain points out.
Dufty says that while AppDirect was founded primarily to target telecom operators, it also enables the Staples app store and Samsung's Knox store, and sees growth potential in verticals such as consulting and real estate.
— Robert Clark, contributing editor, special to Light Reading