Cloud Computing Services Sales $47 Billion for 12 Months Ending in September 2015

Cloud computing infrastructure spending was about $60 billion for the 12 months ending in September 2015, according to Synergy Research Group, growing 28 percent annually.

About $47 billion was earned by sales of various cloud services.

Service revenues included $20 billion for cloud infrastructure services (IaaS, PaaS, private and hybrid services) and $27 billion from software as a service.

Public infrastructure as a service and platform as a service had the highest growth rate at 51 percent, followed by private and hybrid cloud infrastructure services at 45 percent.

Private cloud spending grew 16 percent.

source: Synergy Research

2016 Year the Phone Number Disappears?

With 800 million people using Facebook’s Messenger app every month, it is understandable that

David Marcus, Facebook VP of Messaging Products, would say that 2016 is the year we see “the disappearance of the phone number.”

Many of you have been hearing such predictions for a decade or two, so will not pay too much attention. It is not that use of Messenger and other social messaging apps will stall. Indeed, it seems certain usage will grow.

But there simply is too much necessity for phone numbers, globally, for other reasons. Many of you know all the reasons why people do not rely on “phone numbers” to dial or reach people.

Underneath, in the network, there is little way to avoid such conventions.

75% of Cars Sold in 2020 Will Be Connected Car Capable

By 2020, 75 percent of cars shipped globally will be built with the necessary hardware to allow people to stream music, look up movie times, be alerted of traffic and weather conditions, and even power driving-assistance services such as self-parking. according to Business Insider Intelligence.

The connected-car market is growing at a five-year compound annual growth rate of 45 percent, about 10 times as fast as the overall car market.

Of the 220 million total connected cars on the road globally in 2020, connected services will be activated in 88 million of those vehicles.

Business Insider

Ration or Use Prices: There is No Other Way to Manage Use of Network Resources

All the arguments about network usage aside, “networks are finite resources, and there are only two possible ways of allocating those resources,” says analyst and consultant Martin Geddes.

Either there is a market for a “quantity or quality” and the price mechanism decides who really values it, or here is rationing of resources by some decision process imposed on users.

“There is no third option: pick one of the above,” Geddes says.

In other words, we have the choice of using a price mechanism, or rationing. Geddes argues that all T-Mobile US customers essentially win when Binge On is enabled, because overall network load is reduced.

Some prefer rationing, even if that is not what they claim is the case. Others prefer price mechanisms. Congestion is actually a form of rationing. So is Binge On.

Some argue use of price mechanisms would work better, in part because a price mechanism allows buyers to decide how much they want to pay for, and encourages them to consider alternate ways of satisfying their bandwidth demand.

That is why Wi-Fi offload works. People choose to use it, instead of staying on the mobile network, because there are actual or potential cost savings.

No Simple Way Forward for Access Providers

Communications service provider strategic and business model issues that were challenging before the Internet became far more acute afterwards. The widely-held notion that access providers were in danger of becoming “dumb pipes,” with application value migrating up the stack, is not misplaced.

The fundamental problem is that the historic, vertically-integrated voice model is difficult, at best, in the Internet era, where the fundamental model of computing is horizontal (layers) rather than vertically integrated.

That, in turn, has profound business implications. Of four major market positions examined by BCG analysts, though it is possible for a traditional telco to keep its legacy business model, some might say that will prove challenging, as it requires both vertical integration (apps and access) as well as the ability to maintain profitability with only incremental improvements to the key processes and services.

The problem is that the logical moves that could provide sustainability move in contradictory directions: towards a real focus on “hyper-scale” wholesale operations with massive scale, without worrying about innovation.

The other direction leads towards apps or platforms, both of which arguably are built on non-traditional telco skills and competencies.

The four types of roles “require different skills and motives, present different financial profiles to investors, and need to be managed on different time horizons.,” BCG argues. “A company can flourish in multiple layers—Amazon does it—but most organizations consistently underestimate the enormous challenges.”

Communities of users, professionals, and small entrepreneurs are typically found toward the top of the stack (application layer). “They flourish when uncertainty is high but the economies of mass are weak and where innovation comes through many small, seat-of-the-pants, trial-and-error bets,” BCG says.

Infrastructure organizations are typically found at the bottom of the stack. “They are most useful when uncertainty is low and economies of mass (specifically scale) are overwhelming,’ says BCG. “heir core competence is in long-term, numbers-driven capacity management.”

Curatorial platforms, narrowly defined as organizations that exist solely as hosts for communities, are a hybrid. In the stack, they lie immediately below the community they curate.

Traditional oligopolists occupy the broad middle of the stack. They have the advantage when uncertainty is high but not incalculable, and economies of mass (scale, scope, and experience) are significant but not overwhelming, BCG argues.

They exploit economies of scale and scope by placing big bets on technologies and facilities and make incremental improvements in products and processes.

Telcos and cable TV companies are “traditional oligopolists.” To sustain that role, they must sustain or create vertically-integrated services, continue to operate with economies of scale, and hope that incremental improvements are sufficient to sustain the business model.

That is a tall order, given the declines we continue to see in all the core legacy services. And that is why strategy now matters so much, and why Internet of Things now matters hugely. IoT might offer the best opportunity for creating a big, new vertically-integrated replacement business.

source: bcg

IoT Could Turn "Digital" Laggers into Leaders

The Internet of Things is going to be a big deal for a number of reasons, not least of which is the likelihood that IoT is the way “physical” industries, unlike “virtual” industries, will be able to leverage digital technology.

Up to this point, the industries that have been most able to take advantage of digital technology are based on intangible, or largely intangible (software) products, including information technology, media, finance and insurance.

It does not take much insight to suggest that manufacturing, trade, health care and other industries can benefit from IoT capabilities.

source: McKinsey

Content, Not Speed or Price, is How Mobile Ops Will Compete in Future

A very good rule of thumb, when assessing consumer or business behavior, is to watch what they do, not what they say. For example, telecom executives often tell researchers that their biggest competitors are over the top app providers.

But some would say they take action in ways that suggest the “real” competitors are in fact, other service providers, not app providers, as surveys often suggest is the case.

Not very often does any tier-one telco or mobile service provider actually take a concrete step--and back that with spending commitments--that suggest an app provider really is viewed as a key competitor.

As just one example, leading mobile service providers often adjust their own policies, prices and packages based on what some other major competitor just has done. At other times, actions are taken to distinguish one contestant from others in the market.

Cable operators are not upgrading their networks to gigabit speeds because of Facebook or Netflix, but because of Google Fiber, a facilities-based and direct Internet access and video entertainment competitor.

What executives might be signaling that the leading strategic concern is loss of value, revenue and profit margin from core services to OTT competitors.

That concern is legitimate, but does not conflict with the reality of direct competition from other leading service providers as the driver of real-world actions.

There is an important strategic implication: some app providers--particularly in content areas--will almost certainly emerge as key partners as mobile service providers look for ways to differentiate their offers in ways other than “speeds” and “prices,” the two major ways mobile operators have competed to this point.  

As Long Term Evolution networks--and coming fifth generation networks--are fully deployed by virtually all leading mobile service providers, and if spectrum allocations become more even, among the leading suppliers, “speed” will not be a differentiator.

At some point, neither will “price,” since competitors can match offers when they must. The main reason subscription video average revenue per user has not declined in decades, compared to every telecom service, is that entertainment video is content.

Good content is hard to produce and inherently limited, which has value--and therefore pricing-- implications. That means mobile operators often will bundle OTT video to create distinctiveness, and likely will find other content-related apps useful for the same reason.

Some would point to Netflix and Spotify, Binge On and other efforts as examples.

And that means partnerships between OTT app providers and mobile service providers, as a long-term trend.

source: Openet

The issue is how much differentiation is possible. The answer might vary, market by market, based on regulatory rules enabling or prohibiting certain promotions or policies, such as exempting video consumption from data plan usage, pre-processing video for better bandwidth efficiency, allowing free access to video services or other measures that create differentiated offers.

At the January 2016 AT&T Developer Summit and Hackathon, Tom Keathley, AT&T SVP for wireless network architecture and design, pointed out that video generated between 40 percent and 50 percent of data traffic on the AT&T mobile network and more than 50 percent of traffic on its wired network.

Keathley suggested it would be not unreasonable to expect that entertainment video would grow to perhaps 70 percent of mobile data traffic by 2018.

AT&T would consider efforts such as limiting of video stream quality to match a device screen’s capabilities, perhaps at 480p resolution, as a possibility.

That will enrage some policy advocates who insist “all bits be treated equally.” Whether that is possible, or desirable, is the issue.

But such pre-processing also illustrates why content bundling will be more strategic in the future. It is content that now drives mobile data consumption, while content remains a key means for differentiating one carrier's offer from another's.