Friday, October 27, 2017

"Up the Stack" Strategy Has Changed Since 2003

Lots has changed in the telecom business over the last decade or two, among them the logical growth opportunities for service providers. In 2003, a reasonable argument could have been made that telecom firms should move into the information technology  (computing) ecosystem. That, in fact, was a strategy some had attempted since the 1980s, with very mixed success.

In 2017, the more common argument is that tier-one service providers should move into video entertainment and internet of things services (connectivity as a minimum, applications and platforms where possible).

These days, executives are more often to consider extension into adjacencies “up the stack,” such as in some verticals where application or platform roles are possible. More often, horizontal acquisitions will be the obvious moves.  

“A consensus is emerging that operators should focus on growth that supports their core connectivity  business, and that their explorations of new areas (if any) should be limited to a small number of opportunities,” Analysys Mason says.

Gone is any serious interest in core computing, even if efforts to enter some parts of the cloud computing business--in the form of ownership of data centers--has been a focus.

For the most part, telcos think others have occupied key segments of the cloud computing ecosystem, including general-purpose cloud computing (Amazon Web Services, Microsoft, Google, others); data centers (most often owned by third parties, not telcos) and consumer and enterprise applications.

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