Cloud Computing Business Worth $188 Billion by 2022?

Amazon Web Services revenue could soar ten-fold between now and 2022 to more than $30 billion a year, according to projections by JPMorgan analyst Scott Devitt. 

The good news for other providers is that the whole market could be as large as $188 billion.

No Surprise: Owners of Internet-Connected TVs Like to Use Them

According to research from the Diffusion Group, more than half of consumers with a net-connected TV have increased their use of over-the-top broadband TV sources in the last year, with 24 percent reporting a sizeable increase.

That should not come as a surprise. People who buy connected TVs arguably are more interested in watching Internet-delivered television than consumers who do not buy Internet-capable TVs.

 

The only surprise might be that eight percent of surveyed owners of Internet-capable TVs said they watched less over the top content over the last 12 months, the study finds.

At the same time, like the air escaping from a tire with a slow leak, customers buying traditional video subscriptions continue to defect, albeit slowly. 

Nobody Makes Profits Selling Smart Phones, Save Apple and Samsung?

With the exception of Apple and Samsung, no mobile handset suppliers are making money, a study by Canaccord Genuity has found.

Apple and Samsung earned 109 percent of third quarter 2013 mobile phone profits, according to Canaccord Genuity analyst Mike Walkley.

Apple earned 56 percent of profits while Samsung earned 53 percent of profits (the figures include the impact of losses by other suppliers)

Other manufacturers such as BlackBerry, Nokia, LG, HTC and Motorola lost money, Walkley said.

The study, though, did not include data for Huawei, Lenovo, ZTE, and Coolpad, as data was not available for those firms.

B2B Brand Messaging Misfires With Buyers, McKinsey Finds

Business-to-business firms appear not only to be wasting time and money putting out messages about their brands, but also often emphasize what is not relevant to buyers, missing a chance to align brand messages with the values enterprise buyers of products actually care about, a study by McKinsey finds.

That there can be a disconnect between the messages suppliers put out and the importance of those messages on the part of business buyers might not strike you as unusual. What might be important is that the degree of mismatch is so wide, the study by McKinsey suggests.

Significantly, the study finds there is “a marked apparent divergence between the core messages companies communicate about their brands and the characteristics their customers value most.”

“Themes such as social responsibility, sustainability, and global reach” are common themes in much business-to-business messaging. Business buyers tune out those themes, and do not consider them highly relevant, the study suggests.

But two of the most important themes for customers, namely “effective supply chain management” and “specialist market knowledge” were among those least mentioned by B2B suppliers, McKinsey says.

In other words, what customers deem highly relevant in their evaluation of brands is not what suppliers are saying.

“Honest and open dialogue” is what customers considered most important, but was one of the three themes not emphasized at all by the 90 companies in the McKinsey study.

The study also showed “a surprising similarity among the brand themes that leading B2B companies emphasized.” In other words, instead of emphasizing distinctiveness, firms tended to say the same things as their major competitors.  

When every company says the same thing, it is hard to create distinctiveness and uniqueness.

The study was based on a review of publicly available documents of Fortune 500 and DAX 30 companies, as well as interviews with 700 enterprise buyers of products produced by those firms.

European Mobile Network Investment Has Fallen 67%

There's a reason European regulators are worried about next generation network investment. By some estimates, investment in mobile networks in Europe, since 2004, will have fallen 67 percent. 

The biggest challenge is lagging investment in Long Term Evolution, the next generation of mobile networks, according to the Boston Consulting Group.

Some will point out that the disparity is caused, in substantial part, by the experience European mobile service providers had when they invested heavily in 3G spectrum and networks, only to discover that the generated revenue did not match the investment costs. 

There is little doubt that European 4G investment lags levels seen in the United States and Japan. 

European LTE spending, on a per-subscriber basis, is half that of the United States and of Japan, BCG says. 

That accounts for LTE adoption that is less than one percent of mobile connections in Europe at year-end 2012, compared with 11 percent in the United States and 28 percent for South Korea. 

In fact, it would not be wrong to say most of the world's LTE subscribers are in just three countries: the United States, South Korea and Japan. 

The situation is not much better for fiber access, according to David Dean, Boston Consulting Group senior partner and Alan Marcus, BCG senior director.

Service providers say policies designed to promote competition, especially promoting robust wholesale access on incumbent networks for third party competitors, has succeeded. But the cost of that success is a vastly-reduced climate for new investment, so long as the robust wholesale requiresments are maintained. 

Sprint Needs Lower Frequeny Spectrum More than a Modest Amount of 1900 MHz Spectrum

Spectrum to support mobile services has generally become more valuable since the advent of the mobile Internet era. So it is somewhat surprising when any U.S. mobile service provider decides not to bid on spectrum that can be used for Long Term Evolution services.

But that is what Sprint has decided to do about 10 MHz of 1900 MHz “H Block” spectrum adjacent to existing Sprint holdings.

Sprint had widely been expected to be the sole serious bidder, but the move seems linked to broader interest in the upcoming 600 MHz auctions of reclaimed TV broadcast spectrum.

"Sprint is focused on gaining access to more low band spectrum to add to the company's spectrum portfolio, so we have opted not to participate in the upcoming H Block auction,” Sprint said.

Compared to AT&T and Verizon Wireless, Sprint owns relatively small allocations of lower-frequency spectrum. That matters for rural coverage, since lower frequency signals travel further than higher spectrum signals.

AT&T and Verizon own most of the 700 MHz and 850 MHz spectrum in the U.S. mobile market,  while the Sprint's and T-Mobile US networks primarily use the 1700 MHz, 1900 MHz, and 2100 MHz frequencies.

The basic implication is that AT&T and Verizon will tend to have better coverage, while Sprint and T-Mobile US will tend to have higher bandwidth, all other things being equal.

Amazon Web Services Bigger than All the Rest of Amazon?

Amazon Web Services Senior Vice President Andy Jassy said that CEO and Founder Jeff Bezos believes AWS could be the company’s largest business. That revenues from selling cloud computing infrastructure could be bigger than Amazon’s original e-commerce business is a startling notion.

If Amazon has total revenue in the $61 billion range, that gives you some idea of the potential revenue magnitude Amazon CEO Jeff Bezos believes is possible.

While a ringing endorsement of industry potential, that belief also indicates how tough it might be for other suppliers of cloud computing infrastructure to compete with Amazon.

According to the Yankee Group, cloud computing services might not be a $5 billion U.S. business, at the moment. assuming AWS mostly sells infrastructure as a service.

Forecasts by Forrester Research are comparable.

Separately, AWS also announced availability of Amazon WorkSpaces is a fully managed desktop computing service in the cloud, allowing customers to easily provision cloud-based desktops. That is significant because it moves Amazon into the software as a service segment of the cloud computing business, clearly the biggest revenue contributor.

Amazon Web Services argues that it can supply virtual desktop services at lower costs than competing solutions or traditional desktops.