In my last column, I raised some concerns about how rushing to the cloud might work against the telco vendors over time. While this trend is impossible to ignore, the end product becomes SaaS (News - Alert) – software as a service - where upfront capital expenditures are replaced by user-based licensing fees. Vendors need to sell more seats this way to be sustainable, plus, they must adapt to a recurring revenue stream model, along with lower margins.
Some vendors will make this work, but generally speaking, the cloud takes away some leverage as they drop a few notches in the value chain. In essence, their solution/platform will only work as well as the underlying network, and it seems to me that this scenario could end up favoring service providers. As mentioned in my previous article, the cloud shifts the balance of power to the data center or server host, and this is where I see opportunity for service providers.
Having attended Cisco’s (News - Alert) Collaboration Summit earlier this month, I picked up a lot of takeaways that impact different elements of the communications ecosystem. For service providers, I think there are a number of implications, and some potentially exciting opportunities. That said, I don’t see these as universal opportunities, but there’s really nothing precluding any carrier from acting on them. In this article, I’ve identified five business opportunities that are based on the world Cisco is envisioning.
Just to be clear, this is not really a Cisco-specific analysis, as these technologies can largely be provided to varying degrees by other vendors. At this point in time, however, Cisco happens to be offering all of them to a more advanced level, and their summit was a great opportunity to see these technologies in one place.
Opportunity No. 1: Telepresence (News - Alert)
Cisco likes to claim this term as their own, and while are they are the market leaders, other vendors have various flavors of telepresence. Regardless, there is definitely a business opportunity here for service providers, primarily in federating amongst themselves. This could open up the market considerably, and allow carriers to add value to the telepresence experience by supporting secure access to directories, and making it easier to run ad hoc sessions. Cisco is facilitating that with their Telepresence Exchange platform, and already has 11 carriers on board, who can now provide seamless inter-company sessions on a global basis.
Opportunity No. 2: Video
This is the biggest story in Cisco’s world, and if you believe the numbers, it’s easy to see why. During Marthin De Beers’s presentation, he noted that video has now caught up to voice in terms of Internet traffic. More telling, though, is the 3 year outlook, when video is projected to account for 90 percent of network traffic. I have written elsewhere about the power of video, and carriers clearly need to move more in this direction to stay in the money. Voice on its own will always be important, but the revenue opportunity for carriers is in terminal decline. One way Cisco is addressing this is the launch of high quality WebEx, where they can support a telepresence-like experience over the Internet. Aside from making the desktop experience more compelling, they can extend this to mobile devices – not just their own Cius, but the iPad as well. With solutions like these on the market today, carriers need to leverage their networks to support reliable, secure and high quality video experiences.
Opportunity No. 3: Mobility
This is not news for carriers, but mobility is tightly coupled with video as a business opportunity. One of the more interesting discussions at Cisco’s summit was about if/when the mobile phone would replace the desk phone. Clearly, this would have significant implications for wireline carriers, and enticing opportunities for mobile carriers, along with cablecos who have ambitions for the business market. Solutions have existed for some time to support the latter (especially FMC), but with the emergence of tablets in 2010 – including Cisco’s Cius – the possibilities for mobility become much more interesting for the business market. For Cisco, the tablet concept is video-centric, but with enough integration, adding voice – telephony – is quite feasible. Between smart phones and tablets, I have no doubt there will soon be a portion of the business market that will be ready to reduce landline trunking to the bare minimum, or even not at all.
Opportunity No. 4: Social Media
All businesses are trying to figure out how to harness social media, and Cisco’s answer is Social Miner. The appetite for social media seems insatiable, and there is opportunity for anyone who can help businesses – and individuals – manage it all, and even derive some practical utility. To get a quick sense about Cisco’s approach, just watch this one-minute video about Social Miner. It’s very tongue-in-cheek, and has some Big Brother overtones, but the point is social media can help solve problems in new ways, and businesses will gladly pay for solutions that address pain points. Social media is still quite new, and even without proven business models, major players are emerging. Nobody really knows if Social Miner will succeed – I think it will – but Cisco has taken a pretty strong position here, and carriers need to figure out how to insert themselves into the social media value chain. They cannot afford to dismiss social media as a time waster for teens – not only is this trend growing quickly across all age groups, but it’s moving fast – very fast.
Opportunity No. 5: umi
Not even Cisco is immune from coming up with odd-sounding names for new offerings. I’ve written elsewhere in this vein about Cius, and as Marthin De Beers stated, “umi changes how you think about television”. Without focusing too much on Cisco, the idea here is to provide an integrated platform that basically bolts the desktop to your TV, creating a singular environment for both worlds. For the true digerati, this means you may never leave your couch again, as the TV screen mashes up both lean-forward and lean-back experiences. Cisco’s demo was pretty impressive, and umi allows you to seamlessly do just about everything I’ve talked about in this article – watch TV, make video calls, upload content, share content, watch video messages, return calls, etc. I think we’re still about five years away for this integrated home media environment to become mainstream, but once it does, there really won’t be any need to have a landline. IPTV (News - Alert) offers some of these pieces, but that’s a carrier-centric solution, and is not as encompassing as umi. This is a different proposition, and being vendor-based, any carrier could adopt it as part of their offering. Currently, umi is available at Best Buy (News - Alert), making it a pure retail play. Major carriers, for example, have channels of their own, and there’s nothing stopping them from offering their own umi packages. This may be early adopter technology, but once you see umi, it’s not hard to envision broad popularity, especially if it’s easy to use, priced right, and is supported by enough broadband. I definitely see parallels here to smart phones – as with any technology, once a better solution comes along, adoption can happen pretty quickly.
Jon Arnold, Principal at J Arnold & Associates, writes the Service Provider Views column for TMCnet. To read more of Jon’s articles, please visit his columnist page.
Edited by Tammy Wolf