InfoCom foresees migration effect in providers’ cloud service revenue-mix to 2017

Stuttgart, Germany — In the effort to ease competitive pressure and the necessity to support growth, telecom providers seek high flexibility and scalability in providing services. However, data centre setups are often complex and unable to adapt quickly to customers’ demand. Cloud services, mainly outsourced private cloud and public cloud services, have the potential to act as “diversifiers” for providers’ portfolios and a possible cure to eroding margins.

In a survey conducted by InfoCom among German-based telecom providers, the great majority (nearly 80%) identified IaaS (rather than SaaS and PaaS) as the cloud service that has the potential to generate the highest revenue for their businesses. Specifically, the providers interviewed see IaaS as the cloud service that best complements their current offers and is the easiest to manage.

Although the majority of the providers believe that simplifying the data centre improve their ability to deliver new services more rapidly and cost-effectively, data centres will still make up a consistent share of their revenues in the coming years. According to InfoCom’s market model for the German retail market — broken down by all types of cloud services — in the year 2017, a share of the total revenues will still be generated by existing classical hosting/housing or colocation services. Consequently, the model clearly shows a change of structure in the different components of the revenue-mix, revealing a migration/substitution pat-tern rather than brand-new revenue streams.

More and more providers view cloud services as an opportunity to expand their current ser-vice portfolio, thereby optimising capital and operational spending through economies of scale. Providers’ profit margins on their core business areas — such as bandwidth services, hosting or colocation — are low and keep declining. Therefore, IaaS, in particular, allows to improve the offer to enterprise customers, to increase the revenue with existing customers and to open new business opportunities.

With cloud services, providers can gain competitive strength thanks to the strategically important benefits that these services can provide to enterprise customers. In particular, a greater financial flexibility and improved business agility. Through the cloud, enterprises host their IT in the highly-available environment of the provider, reducing CAPEX. Furthermore, IaaS allows scalability, therefore, flexibility. Enterprises can access resources adjusted to their scale without the complexity of managing large infrastructures. And last but not least, IaaS offers a pay-as-you-go model, giving the flexibility to scale up or down in line with business needs, allowing for even greater cost-efficiency.

About this extract: This extract in based on an article published on TS&T – Telecom Strategies & Trends, InfoCom’s highly analytical telecoms publication. This ejournal provides in-depth articles on a wide variety of compelling innovative topics. Each issue contains up-to date rigorous analysis. TS&T is available as an annual on-line subscription providing 24 issues throughout the whole year. If you are interested in this publication, do not hesitate to get in contact with us. Talk to us. We listen.

About InfoCom: InfoCom is a market research and consultancy company with over 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom’s independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.

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