How cloud opportunities are set aloft by Ethernet
The 10th Ethernet World was held in Prague September 30 through October 2. The global enterprise Ethernet service market continues to grow robustly. For full-year 2013, Ovum projects a $34bn Ethernet service market worldwide, growing to $62bn by 2018 at a 13% CAGR.
Ovum chaired the cloud services and data center day at the conference. The industry discussion on cloud services continues to mature based on new business model constructs, a growing body of compelling use cases, more data center–optimized connectivity, and growing high-capacity mobility deployments. The industry has been openly discussing impediments to cloud adoption to date, enabling a productive discussion on potential solutions.
The promise and allure of clouds: new Ethernet traffic generated
Three years ago, cloud was an over-hyped marketing term. The industry still uses the term, but it now rests on a firmer, more down-to-earth foundation. Cloud colloquially means services housed in a data center, accessible by high-speed WAN connectivity over communications service provider (CSP) networks.
For the industry, the great promise of cloud services is transitioning former internal enterprise LAN functions into revenue-generating, WAN-enabled, integrated CSP services. Cloud services can also mean newly created applications that leverage the low-cost delivery platforms enabled by hyper-scale data centers connected over higher-capacity fixed and mobile telecom bandwidth.
Cloud services and Ethernet services are becoming more symbiotic. Ethernet is the deterministic enabler of high-capacity, high-performance cloud services, while cloud services are value-added application drivers for Ethernet services.
Connecting to clouds over the air: a new capability
Mobile operator upgrades to LTE and LTE-Advanced are adding a new dimension to the cloud service discussion. LTE-Advanced will offer higher-speed mobile bandwidth connectivity. On the fixed-line side, consumers and businesses have been using more and more video communication. Now the users of video communication are on the verge of becoming untethered.
The growing list of credible use cases: a new opportunity
At Ethernet World, T-Mobile offered up an intriguing use case, leveraging a new LTE-Advanced mobile video link. In an emergency situation, on-the-scene first responders can communicate with hospital- based medical teams via over-the-air video to more quickly begin triage and diagnosis of patient trauma. The T-Mobile case demonstrated a compelling real world value.
Credible use cases are the key to credible business cases and revenue. CSPs have been promoting LTE and chasing use case development. The industry needs to continue to work closely with their client base and verticals to develop more compelling use cases. Genuine solutions to customer problems have the potential to become genuine revenue streams.
Monetizing clouds: a new business model
The telecom industry has been on a Tolkien-like quest to find new revenue streams. CSPs have watched as more and more value and commerce has flowed over their connectivity infrastructure without bringing them any new revenues. There is slim chance that the industry will be able to change traditional business models. Their best hope is likely to structure new business models in a manner that ties the end application value to new CSP capabilities and revenue streams.
In fact, CSPs have an opportunity right now to craft new business models, aligning their revenue with value as new services are deployed over CSP networks. Telefonica outlined just such a plan to introduce revenue sharing into the cloud model. The industry needs further efforts following Telefonica’s lead, embracing business model risk for revenue rewards.
Achieving customer trust: an old barrier to business
Enterprises have been considering the transition to a cloud model, but CSPs continue to cite enterprise trust as a major barrier to further adoption.
How does one build genuine customer trust? There are many dimensions to the answer, and two came up at the conference: building trust through a consultative sales approach and through service performance.
Telefonica promoted consultative selling – while not new, it is a necessary approach for the sale of complex value-added services. Consultative selling is a process of building a deep understanding of client needs and working together with the customer to build a comprehensive solution. Consultative selling has the potential to aid in the trust-building process.
From the technology perspective, cloud services can be offered over a continuum of data connectivity options: from the public Internet to IP VPNs to Ethernet. Cloud services delivered over Ethernet can offer a differentiated quality-of-service experience, including known latency for primary and protection paths, end-to-end service management, and the highest levels of security. Cloud services over Ethernet will enable stringent application performance SLAs. The industry needs to continue to demonstrate performance to win customer trust and grow the cloud Ethernet market.
- » Public cloud revenue will reach $500 billion in 2023: The key factors driving it
- » The 2019 Forbes Cloud 100 analysed: Stripe top again amid big data boom and strong exits
- » Why it continues to make sense for IT ops to move to the cloud: A guide
- » VMworld 2019: Going big on Kubernetes, Azure availability - and a key ethical message