Cisco is making moves in the mobile network infrastructure space

Networking vendor Cisco, cresting the wave of IP integration, has been taking major strides into the telco world in recent weeks through a host of acquisitions, including LTE small-cell specialist Ubiquisys, policy management solutions firm BroadHop and SON software provider Intucell. The 66,000 employee-strong,  $8bn per year profit making business is well placed to exploit the opportunity in the telecoms space.

“Cisco’s heritage is in IP and data communications, and as the networks begin to look more like regular IP networks, it starts playing more and more to Cisco’s hands,” said Daryl Schoolar, Ovum’s principal analyst covering the wireless infrastructure space at the research firm.

Of course, Cisco is not moving into entirely foreign territory, it already has experience of working with operators by supplying them with packet core solutions over the years, and as Schoolar points out, many if not all operators most likely already rely on Cisco’s equipment, for technologies such as unified comms solutions or datacentre products. However, what it can now draw on when taking these latest steps towards mobile operators is the firm’s deep understanding of data networks and how to manage data.

“Cisco has for several years been talking about network modernisation and network monetisation, and that’s a line of discussion you’re hearing from network infrastructure vendors today,” says Schoolar. “When Cisco first started talking about it, there were one or two concepts that were a little hard to understand but today, people have a better understanding.”

It’s a trend that is not limited to Cisco, software provider Oracle is also eyeing a higher profile role in the mobile network, evidenced by its $2.1bn acquisition of unified communications software maker Acme Packet and signaling, policy control, and subscriber data provider Tekelec.

“More and more IT companies looking at what can they leverage from their past and their history in IT, and trying to see where they can fit in the telecoms space,” said Schoolar.

For Cisco, this means everything but the macro network. The network infrastructure market already has five large enterprises dominating the space: NSN, Ericsson, Alcatel-Lucent, Huawei and ZTE. Schoolar believes that due to the market congestion Cisco will not set out to compete in this space.

“Cisco doesn’t want to compete with the macro vendors, and I don’t see how they would fit into that,” said Schoolar. “But as we’ve seen, they have gone after all the other pieces in mobility.

“Cisco has probably been thinking where is the future of networks? And it’s in mobility. What are the inflection points in the network that they can get into since they aren’t in the macro space, but in basestations? So that’s what they’re focusing on – these new emerging areas that give room for data analytics, SONs and small cells.”

Cisco intends to acquire Ubiquisys for $310m

Cisco has made a major move into the mobile networking space by announcing its intention to acquire small-cell technologies provider Ubiquisys.

The UK based privately held firm specialises in 3G and LTE small-cell technologies that provide connectivity across heterogeneous networks. Cisco has agreed to pay approximately $310m in cash and retention-based incentives to acquire the firm outright.

The move follows the similar recent acquisitions in the mobile network space of policy management solutions firm BroadHop and SON software provider Intucell.

Cisco aims to add Ubiquisys’ indoor small-cell and software expertise to its own radio and wifi portfolio to create a small cell solution for operators that supports their transition to LTE networks. Cisco said that the move reinforces its commitment to operators and will enable it to deliver more intelligent mobile data networks.

“Cisco is ‘doubling down’ on its small cell business to accelerate strong momentum and growth in the mobility market,” said Kelly Ahuja, senior vice president and general manager, Cisco Mobility Business Group.

“By acquiring Ubiquisys, we are expanding on our current mobility leadership and our end-to-end product portfolio, which includes integrated, licensed and unlicensed small cell solutions that are tightly coupled with SON, backhaul, and the mobile packet core. For service providers, Ubiquisys supports cost effective coverage and capacity that delivers a differentiated customer experience.”

Upon the completion of the acquisition, Ubiquisys employees will moved into Cisco’s Service Provider Mobility Group.

“Cisco is no stranger to small cells, but that has been primarily through its carrier wifi efforts,” explained Daryl Schoolar, principal analyst at research firm Ovum.

“In the licensed spectrum small cell space Cisco has basically been reliant on its femtocell relationship with AT&T. Outside of its work with AT&T, Cisco’s licensed small cell experience has been hard to find.”

Schoolar added that in contrast, Ubiquisys has over 50 customers including Japan’s Softbank, France’s SFR, and Network Norway.

“Ubiquisys’ small cell experience greatly bolsters Cisco’s small cell position,” he added. “The acquisition doesn’t just provide Cisco with Ubiquisys’ small cell knowhow; it also gives Cisco experience in working with a broader set of mobile operators.”

Schoolar added that with the acquisition of Ubiquisys, Cisco would have greater market credibility when it comes to 3G and LTE small cells.

“Cisco will also benefit by having greater control over Ubiquisys’ product development cycle, freeing Cisco from having to rely on the development cycle of third-party partners like IP access.

“Small cell vendors should take Cisco very seriously. Not only is Cisco greatly improving what it can offer mobile  operators  in terms of a licensed small cell, Cisco can also offer those mobile operators other tools, like data analytics, SON, and evolved packet core needed to build a mobile network. This isn’t something all of Cisco’s competitors can claim.”

Among the big guns firing off were the likes of Amdocs, Oracle and Cisco. Amdocs, touting its newly-upgraded end-to-end OSS/BSS platform CES, now in its ninth version, also announced its entry into the cloud market in a big way. Products included MVNO / MVNE’s, solutions and M2M and mobile payment platforms. The company also had on offer cloud-based solutions for CSP’s looking to offer ‘one-stop’ services to SMB’s, as well as a managed ‘private’ cloud product that is based on a fully virtualized environment and includes Amdocs CES 9. In a separate announcement, Amdocs also announced a new order-to-activation system, addressing the need for even greater complexity when offering new services to customers, along with a customer win for some BSS elements of CES to be supplied to state-owned P&T Luxembourg.

Following hard on the heels of the news it is to buy session border controller specialist Acme Packet, Oracle, despite having once said its interest in telecoms software stopped abruptly at the network edge, unveiled a new release of its OSS suite. The new product line comes complete with design studio, order and service management, inventory management and network optimization. Right on time too, it had a customer announcement for the upgraded system in the form of South Korean CSP LG U+, which is using the system in a converged configuration, assisting the rollout and assurance of LTE as well as gaining greater visibility of its existing fixed network.

Not to be left out, Cisco, perhaps feeling confident with the impending closure of its Broadhop acquisition, has launched a suite of products, the result of more than US$1.5 billion in recent acquisitions and in-house innovation says the company, under the name Quantum. The system is designed to deliver mobile network intelligence and programmability to service providers through a suite of software solutions. The suite is built around Cisco’s Quantum Policy Suite.

Other new products of note included Orga Systems’ converged billing system for LTE which includes Java-based next-generation business logic, real-time service personalization, extended rating and account management. Tektronix also had something to shout about with the launch of what it calls the Telecoms Intelligence Provider, which is a platform for collecting, analysing and auctioning data from many of the most critical workflows within a service provider’s business.

These kinds of announcements are however the common fare of events such as the Mobile World Congress and often overshadow those of much smaller companies which are no less significant. For me, the announcement that best fits the latter category this year is of a partnership between ipoque and Broadforward who jointly, and rather modestly, promise to “deliver advanced DPI interworking”. The significance of the partnership is that by combining ipoque’s network intelligence and policy control solutions with Broadforward’s interfacing experience, the companies have potentially solved a problem for both early adopters of policy-based traffic management (Policy 1.0) as well as those who aren’t quite ready to take on the complexities of policy 2.0.

The transition from 1.0 to 2.0 is not a simple matter and has in many cases, anecdotally at least, has required either the replacement of the original policy control point in order to interface correctly with On-Line Charging (OLC) systems or the installation of a second PCRF in order to separate traffic management and OLC functions. What the two companies have produced between them is essentially a traffic management platform that can be interfaced with an OLC system in, claim the companies, a matter of days rather than weeks or months.

If so, then this is probably one of the more important support software announcements to be made at MWC 2013. Integration is still a big problem for the telecoms industry, despite the plethora of end-to-end solutions currently available and, as has been the case in the past with other areas of technology, it is often the smaller companies that crack the biggest problems. If nothing else, the clutch of announcements made at this year’s show prove that the OSS/BSS sector is in good shape, with a healthy mixture of solid development and white-hot innovation.

xDSL and cable will continue to dominate fixed broadband in Brazil

Brazilian appetite for broadband connections shows no signs of waning, according to Cisco’s latest Broadband Barometer, which found that there were 25.5mn fixed broadband connections in Brazil offering speeds of 2 Mbps and over by the end of 2012.

The study, based on findings by US market research firm IDC, found that the number of these connections (dubbed ‘Broadband 2.0′) rose 11.5% between January and June 2012, almost three times as fast as slower ‘Broadband 1.0′ lines, which totalled 9.2mn connections.

Cisco’s study predicts that Brazil will have over 39.2mn broadband connections by 2016, of which fixed-line connections will account for 69.3% and mobile will represent 31.5%. Two-thirds of all fixed broadband connections will offer speeds above 2 Mbps.

“The Barometer 2.0 is a solid basis for the broadband debate,” said Anderson A. André, director of Service Provider, Cisco Brazil. “Brazil should be targeting an increase in broadband speeds and quality, and everyone should be shouldering this responsibility: the government, operators and technology companies.”

In terms of access technologies, xDSL continues to dominate the market with a 65.9% market share, while cable represents 29.7% of all fixed connections. These two technologies will continue to dominate the Brazilian market over the next few years, although more advanced technologies like fibre-to-the-home (FTTH) are growing, says Cisco.

The study predicts that recent industry regulations should eliminate market concentration, attracting new competitors, boosting the triple play market in Brazil and helping to increase broadband penetration. Consumer spending and business should further benefit from major upcoming events in 2014 and 2016 such as the 2014 Fifa World Cup.

What was striking about the results is just how much the responses from operator personnel (600 individuals from 260 separate opcos) matched those of their peers across the wider industry (almost 2,000 respondents, all told), even when looking at contentious issues like roaming and regulation. Does this mean the industry has aligned in the face of threat from external players? After all, the snake is an adaptable creature renowned for its ability to sneak into other environments. Or does it mean that operators are taking their lead from the vendor community in these cautious times? And does that even make sense? It’s not like the vendor sector is the most stable of environments at the moment.

A strong sign of that shake up in the vendor space was seen this week when telco session delivery specialist Acme Packet said it had agreed to be acquired by US software giant Oracle.

It’s long been recognised that the networking and IP specialists that dominated the IT world, would have scope to win telco customers as networks shift to all-IP. Indeed, Telecoms.com found that more than two-thirds of telecoms professionals (67.5 per cent) believe that the move to LTE will change the relative standings of equipment suppliers.

Oracle’s move this week sends the company deeper into telco territory and the software firm, like industry peer Cisco, is in a favourable position due to deep pockets. At the end of last year, Cisco made clear its intention to acquire long-time partner Broadhop – a telecom specialist in the policy and charging areas.

There is even a suggestion that Cisco is looking to integrate itself more deeply within the telecoms vertical by shedding its old skin, just like the snake. Just over a week ago the firm sold its home networking and wifi operation Linksys to Belkin and if the Broadhop acquisition goes ahead successfully, a logical next step for a company with Cisco’s pedigree would be to acquire a network infrastructure business, were one to be on the market at the right price.

UK disruptor Virgin Media is one company on the market at the right price and right now is in negotiations with international cable operator Liberty Global to sell out for approximately $23.3bn. Virgin Media operates a nationwide cable, fibre and ADSL network competing with incumbent BT in the consumer space, an enterprise focused business solutions arm, and a highly successful MVNO.

Liberty has internet operations in 11 countries in Europe and TV assets in the US and Australia and if this deal goes ahead it could be the largest shake-up in the UK telecoms and media sector since the merger of T-Mobile and Orange UK in 2010.

The UK is one of those markets where the local carriers are struggling right now, with levels of competition at an all time high. Operator group Vodafone this week announced a two per cent year on year drop in revenue for the final quarter of 2012 on the back of revenues drops in the UK as well as Germany, Italy and Spain.

Giving the likes of Vodafone and rivals EE something to think about is the UK arm of Hutchison’s 3, which, ever the disruptor, has announced that it will not price LTE services at a premium to its existing offers. 3UK is currently bidding for spectrum in the UK LTE auction and said in a statement on Monday that the technology will be added to its network later this year but will not be any more expensive than the firm’s current offering.

EE stole a march on the rest of the UK mobile operator community by launching LTE in refarmed 1800MHz spectrum towards the end of 2012 but priced LTE higher than its 3G/HSPA services. The firm did cut its prices in January however, leading some people to conclude that uptake had been disappointing. That first-mover advantage is shortly to expire of course, so EE is clearly trying to attract as many users onto long contracts as possible.

“If the price of a service is well above a consumer’s income or disposable spending levels then they are simply not going to buy it,” said Jaco Fourie, senior BSS expert at Ericsson, when the Informer spoke to him this week. “If you have more than 100 per cent penetration in a market then you might get a bump from the early adopters when you first launch [a new technology] but when you get to the mass market you will grow at GDP—end of story.”

Chinese vendor Huawei would have been buying in ridiculous amounts of fireworks this week, not just to celebrate the New Year, but also to celebrate the fact that it has been tapped by Microsoft for a project that prices smartphones within the means of low-GDP communities.

Microsoft has pledged to invest around $74m in Africa over the next three years, introducing tens of millions of smart devices into the hands of the local youth and bringing over a million small and medium sized enterprises online.

A key element of the Microsoft 4Afrika Initiative is to increase the adoption of smart devices, with Huawei introducing a full-functionality Windows Phone 8 device at a sub-$150 price tag. The device will be preloaded with select applications designed for local users initially in Angola, Egypt, Ivory Coast, Kenya, Morocco, Nigeria and South Africa from this month.

The Informer had a chat with Vasel Aral, CEO of Kazakhstani operator KCell this week, who predicted that the Chinese vendors will come into the picture this year, or very soon after, with sub$100 smartphones, that will change the course of data adoption. “The Chinese have a good model, with devices comparable to the iPhone 3GS at about $120 already,” he said. “Once we hit sub-$100 that will change the game.”

Interestingly, there was limited sympathy from survey respondents over the suggested plight of Chinese vendors in the infrastructure space; with just 28.2 per cent agreeing that Huawei and ZTE are being unfairly restricted outside of their domestic market on security grounds, while 40.8 per cent disagreed that they are. The remaining 31 per cent of respondents had no opinion on the matter.

Huawei is certainly a shoe-in in Germany however, along with Acme Packet/Oracle, Ericsson, NSN, Qualcomm and Sony Mobile, where Spanish operator group Telefónica has been successfully demonstrating voice call continuity when handing over from LTE to 3G. The handover was achieved by Telefónica Deutschland, in a test lab environment.

While there has been recent progress with VoLTE technology in South Korea and the US, LTE networks are still not able to handover a VoLTE voice call to 2G or 3G. Most networks fall back to legacy 2G/3G networks whenever they make or receive a voice call. But Telefónica’s engineers in Germany have now demonstrated the SRVCC standard (Single Radio Voice Call Continuity) successfully allows for the handover of a VoLTE call from the LTE network to 3G.

The Informer supposes the networks have to have something to offer in response to all the free OTT stuff out there. Around 38 per cent of respondents to the industry survey believe that operators have already been defeated in the battle for brand loyalty by the OTT guys, and analysts are even optimistic about the potential for ‘free’ services to turn a profit.

Apparently, Facebook is well on-track to generate revenues of over $1bn from mobile advertising this year, capturing almost ten per cent of the market. According to Informa, the global mobile advertising market is forecast to generate revenues of $12.8bn in 2013 and the contribution of mobile advertising in Facebook’s total ad revenues grew from 14 per cent in Q312 to 23 per cent in Q412. During this period, Facebook made mobile advertising revenues of around $457.9m.

So provided Facebook can continue to get at least 20 per cent of its total ad revenues from mobile, it should be able to easily make over $1bn from mobile advertising in 2013.

Now there’s something to think about.

Take care and Happy New Year to our Chinese friends,

The Informer

The US software giant said it plans to make the network session delivery specialist a core offering in its communications portfolio to help with the simplification of IT and network infrastructures.

Andy Ory, CEO of Acme Packet, said the deal will help service providers rapidly accelerate the transformation to all-IP communications networks across the globe. “The combination of our session border control and other solutions with Oracle’s powerful Communications portfolio will enable service providers to uniquely differentiate and monetize next-generation services.”

It’s long been recognised that the networking and IP specialists that dominated the IT world, would have scope to win telco customers as networks shift to all-IP. Indeed, competition in the vendor landscape is changing (as identified in our Industry Survey 2013), but Oracle’s move this week sends the company into deep telco territory. Any vendor that wants to be a full service partner to the telcos will need a blended strategy in order to be credible. Specialists will seek to align with full service partners, while others like Ericsson seek to become a one-stop shop.

Dana Cooperson, principal analyst at Ovum, said that companies that specialise in either telecom or IT will need a strategy of how they will benefit from this blending of what were two largely separate domains. “Software increasingly driving network capabilities: Although hardware is still important in many applications to provide needed performance, software is more and more critical for both differentiating and monetising network capabilities. Performance without monetisation is only half the equation.”

But Oracle, like Cisco, is in a favourable position in that it has the cash reserves to be aggressive and purchase assets to extend its portfolio.

At the end of last year, Cisco made clear its intention to acquire long-time partner Broadhop – a telecom specialist in the policy and charging areas. The acquisition would be a significant development for Cisco which has mainly operated through partnerships in this space.

Informa analyst Peter Dykes notes that much has been made in the media of Cisco’s potential inclusion of a respected and widely-deployed PCRF as part of the deal, but equally significantly would be the addition of both on- and off-line charging systems, subscriber data management and application gateway capabilities which are incorporated within the Broadhop Quantum platform.

There is even a suggestion that Cisco is looking to integrate itself more deeply within the telecoms vertical by shedding its old skin. A week ago the firm sold its home networking and wifi operation Linksys to Belkin. Moreover, there are murmurs that if the Broadhop acquisition goes ahead successfully, a logical next step for a company with Cisco’s pedigree would be to acquire a network infrastructure business, were one to be on the market at the right price.

The times they are a changin’.

The range of opportunities for consumers to access video content via IP has exploded over the last couple of years. This has been driven on the one hand by growing bandwidth, the proliferation of new IP-enabled devices including tablets, smartphones and Smart TVs. But it has also been enabled by the entry into the market of a whole range of providers of IP video services – including established pay TV operators as well as commercial and public broadcasters and new OTT aggregators.

IP video service providers have objectives that are many and varied. Some would like to extend the reach of existing services or to provide new functionality to their existing subscribers or users, while others are seeking to compete with existing providers by offering a pure-play OTT service. In a business that is still at such an early stage of growth, the range of monetisation models sometimes seems to be as broad as the number of IP video services available.

In December 2012 we carried out a survey of over 200 industry profesionals into the experiences of providers and potential providers of IP Video services.

This report presents the results of the survey and builds a picture we’ve built of what is actually happening in the world of video services and you’ll gain an understanding of the range and scope of IP video services and the business models underpinning them.

Sierra Wireless has sold Aircard to Netgear and Cisco has sold Linksys to Belkin

Mobile internet solutions provider Sierra Wireless has sold its mobile broadband device business, Aircard, to networking vendor Netgear for €138m in cash. Meanwhile, home networking and cable provider Belkin has taken Netgear’s rival Linksys off Cisco’s hands for an undisclosed fee.

Sierra Wireless’ Aircard business focuses on manufacturing mobile broadband devices, such as PC card slots, ExpressCard slots, USB ports or mobile wifi hotspots, which connect notebooks and other electronic devices to 3G and 4G networks. Under the terms of the transaction, Netgear will acquire the assets and operations of the AirCard business, including customer relationships, products, intellectual property, inventory and fixed asset.

The networking vendor will also take on the Aircard’s liabilities, including existing warranty commitments and other customer obligations, which are valued at approximately $6.5m. Approximately 160 employees will be transferred from Sierra Wireless to Netgear.

The sale will enable Sierra Wireless to focus on the M2M market. “In addition to realising a solid return for the AirCard business, this transaction will provide significant financial resources and capacity to accelerate our growth in M2M and connected device solutions,” said Jason Cohenour, president and CEO at Sierra Wireless.

Meanwhile, Belkin said that it intends to maintain the Linksys brand and added that it will offer support for Linksys products as part of the transaction. All valid warranties will be honoured by Belkin, the firm said, for current and future Linksys products. After the transaction closes, Belkin said that it will account for approximately 30 per cent of the US retail home and small business networking market.

“With complementary innovation and engineering strategies in the combined organisation, Belkin will be able to create new opportunities for consumers, distribution partners and resellers, and will have the strongest retail presence in the US networking marketplace.” said Chet Pipkin, CEO of Belkin. “Belkin also will have access to a large installed base that will be able to upgrade their networking environment to take advantage of new technologies in the smartphone, tablet, notebook and home automation arenas.”

Both transactions are subject to regulatory conditions and are expected to close in March 2013.

Much has been made in the media of Cisco’s potential inclusion of a respected and widely-deployed PCRF as part of the deal, but equally significantly would be the addition of both on- and off-line charging systems, subscriber data management and application gateway capabilities which are incorporated within the Broadhop Quantum platform. Cisco says that the deal would complete the company’s closed loop strategy comprising network, analytics and policy, as well as extending its reach to some 70 customers across 40 countries in multiple verticals, including 3G/4G, Fixed, wifi and converged access.

Against a background of unconfirmed rumors that Cisco is thinking of selling some of its consumer-facing assets such as its Linksys division, it is tempting to speculate that perhaps the company is shifting its focus and is looking to get more deeply involved in the telecoms vertical. If the Broadhop acquisition goes ahead, a logical next step for a company with Cisco’s pedigree would be to acquire a network infrastructure business, were one to be on the market at the right price. Cisco’s response to such a suggestion was understandably vague but it didn’t rule out the possibility. It said in a written statement, “Cisco is always looking at a broader portfolio strategy in terms of capitalizing on market transitions to deliver more relevant solutions to customers.” Watch this space.

It’s been a year for serious cloud investments and networking specialist Cisco has closed out 2012 with a $1.2bn outlay on privately held cloud management company Meraki.

Having missed the 3G boat, Cisco is attempting to make an impression in the telco space by using its IP expertise to cash in on the migration to endto- end IP architecture brought in with LTE. At the same time, however, specialist telecom equipment providers are developing their own ‘Cisco killer’ switching infrastructure.

The acquisition of Meraki complements Cisco’s offerings with software that enables enterprises to centrally manage their network infrastructure from the cloud. Meraki’s technology offers wifi, switching, security and mobile device management that can be centrally directed, supporting BYOD, guest networking, application control, WAN optimisation, application firewall and advanced networking services.

The enterprise market represents a sizeable opportunity for many players in the ecosystem, with Orange recently agreeing to use CDN service provider Akamai’s Aura Network Solutions to address the growing needs of the enterprise sector for improved content delivery.

Orange Business Services, the operator’s enterprise division, will market its offerings initially in France and will address the exponential increase in web-based traffic, in particular HD video and e-commerce services.

Over in the UK meanwhile, citing its previous infrastructure as being expensive to run and time consuming to maintain, Orange Digital has moved its operations to Amazon’s cloud, where it is better able to support spikes in traffic and capacity and reduce costs by £2m over a three-year period.

Through mergers and acquisitions, Orange Digital, which manages the online portals for Everything Everywhere, inherited a legacy physical infrastructure that was no longer adequate to meet the needs of the company and its clients. Moreover, the firm’s traffic profile is variable in nature, which resulted in an oversized infrastructure 90 per cent of the time. “Our infrastructure was expensive to run and time consuming to maintain,” said Neil Jennings, lead enterprise architect, at Orange Digital.

“In addition, we had many EE micro sites and applications that needed rapid and temporary hosting. We were also in a period of expansion, and with traffic on our Orange and mobile home pages climbing to four billion requests monthly, we became limited by our fixed infrastructure.” To scale up a physical infrastructure would present a massive upfront cost and a long time to market for deployment, he added, so the firm sought alternative solutions.

The software architecture team at the firm therefore looked at alternatives to their existing infrastructure, including evaluating cloud service providers like Amazon Web Services. Rival operation, Telefónica Digital, a long time proponent of cloud services for internal and external usage, is also bolstering its global public cloud service with a toolkit that offers users greater control and provisioning of virtual servers.

These ‘Instant Servers’ allow customers to configure the size of their virtual server in terms of RAM memory, CPU and hard drive as well as choose the Operating System (SmartOS, Ubuntu, CentOS, Windows Server, Fedora and Debian) the virtual server runs on, from a single interface. All the hardware resides in Telefónica’s enterprise-grade data centres and is connected to the carrier’s fibre optic network, coupled with an SLA of 99.996 per cent per year and a turbo-charge boost of computing power by up to 400 per cent in real time to handle spikes in demand.

The company is hoping to target thousands of businesses that require a cloud services platform that is easily scalable, with low latency and totally trustworthy—common promises in the cloud services space.

In fact, Informa Telecoms & Media recently warned that the biggest problem with cloud offerings at present is a lack of differentiation.

Camille Mendler, principal analyst and head of enterprise verticals at Informa Telecoms & Media, called for new segmentation methods among operators customer bases in order to give them the tools to capitalise on contextual opportunities. Mendler believes there is a significant opportunity for players to sell cloud services in the ‘long tail’, the blue collar market and micro-businesses.

“Small is beautiful. Looking at the small enterprise opportunity is where much value will be found,” she said. But to date, Mendler claims carriers have focused on a very linear model, based on how many connections they can sell into a single group or customer on a ‘one size fits all’ basis.

“So far it’s a counting game,” said Mendler. “But the marketplace is more crowded in a digital world and everybody is changing business model. So a plain vanilla offering for enterprises of all sizes is not good enough.” In both emerging and developed economies, micro and small businesses are the biggest denominator. These users may not be in an office, because their office is their mobile device, and so they need to be targeted with specific services for those on the move.

Most cloud-based as-a-service offerings are targeted at white collar workers in an office environment, but tailored solutions for smaller businesses can generate good revenues, even if they form part of the “informal” economy. “The informal economy has such a huge impact, especially in emerging markets. They might not be paying taxes to the government but they may still buy services from you,” Mendler said.