Tag Archives: cloud

Broadband, News & Analysis, Ofcom, Streaming, Telecos, Video

Media and comms growth fueled by telcos

August 8, 2016 Jamie Davies

Telcos have accounted for roughly 50% of growth in the media and communications industry, which stood at a £0.4 billion increase to £56 billion, a rise of 0.9%, reports Telecoms.com.

According to Ofcom’s Communications Market Report 2016, the telco industry grew by £200 million over the course of 2015, which has been attributed to the growth of 4G and bundled packages, amongst other factors. 4G coverage is now available to 97.8% of the UK and 80% of households now have access to superfast broadband. Uptake now stands at 48% of adults and 37% of fixed broadband connections are providing actual speeds of 30Mbit/s. 4G coverage is now almost on par with 2G and 3G services.

Telcos were also bolstered by an increase in bundled services, which saw an increase when comparing Q1 2016 to 2015. The bundled services are generally viewed as the industry’s fight against the trend of being relegated to the likes of a utility. 68% of households reported buying at least two of their communications services together in a bundle in 2016, which demonstrated an increase from 63% in 2015. Dual-play packages of landline and broadband, and triple-play packages of landline, broadband and TV, were the most popular.

The report also highlighted the continual shift in the way the UK consumes popular media, as on-demand services become more popular and more adults shift towards OTT services such as WhatsApp. Live TV could be seen as one of the casualties of the report as viewing fell by 5.5 minutes year on year, while recorded and catch-up viewing within a week of broadcast increased by 1.3 minutes. The number of adults who used Video-on-Demand (VoD) services increased over the course of 2015, and while this growth is slowing in some demographics, paid-for services are increasing becoming more popular.

A more worrying sign for the live broadcasting segment could be seen in the breakdown of the age demographics. Although those in the 65+ bracket are continuing to watch live TV, 83% watch live TV over VoD, in the ‘Adult’ age bracket, this number decreases to 63%. The 16-24 age bracket, which could be seen as the future target market for numerous live TV broadcasters claim they spend 37% of their time watching live TV against VoD. Overall, the number of people who view live TV over the course of the week has declined by three percentage points.

These statistics imply there is a shift in the way the younger generations in the UK consume popular media, posing the challenge to traditional broadcasters, who to date may not have considered VoD services such as Netflix as a direct competitor. This is also backed up by the increase in average data usage from households (fixed-line), which grew by 41% over the 12 month period. While a concern to the live broadcasters, this could be seen as a lifeline for the telco industry which is becoming increasingly reliant on bundled services to counter the challenge of the OTT’s.

When looking at the OTT’s, there once again has been an increase in popularity. The number of people who are using the instant messaging services such as WhatsApp is up from 28% to 43%, and photo/ video messaging (MMS) has risen to more than a fifth of adults in a given week. These services have been at the expense of SMS and email, which has seen a decline year-on-year of eight and seven percentage points respectively.

The shift implies a shift in the means in which consumers interact with the media and communications industry. While the utility concern has been on at the forefront of the industry for some time, the increasing popularity of bundled services and VoD services, could offer compensation. That said, the OTT’s are becoming more prominent not only in the younger generations but also the older, demographics which could be seen as somewhat of a cash-cow for the telcos. The 16-24 year old demographic are more likely to embrace the new offerings, though the trend can be seen to be penetrating the ‘Adult’ demographics also.

With this in mind, Philip Marnick, Ofcom’s Group Director of Spectrum, believes the trends will impact the allocation of spectrum.

“One of Ofcom’s key jobs is to manage the UK’s spectrum to enable existing services to grow and new services to develop and come to the market,” said Marnick in the report. “We often hear about the demands for more spectrum to support the increasing demand for mobile data, which is expected to increase by as much as 31 times by 2020 in Western Europe.

“As most spectrum is occupied, we have to consider moving one service to make way for another; for example, squeezing up TV to make more spectrum (700MHz) available for mobile. As part of this, and given the high levels of use of wireless microphones, we are now enabling these to share with aeronautical services.

“We are already looking at the spectrum needs of 5G, which will provide higher capacity networks that are more responsive and can offer faster speeds. This will open up a new range of frequencies in the millimetric bands – an area of spectrum in which satellites provide TV, radio navigation services, support for emergency services, and broadband for very remote locations, on land, in the air and at sea.”

The role of Ofcom is to ensure all services work effectively without interference, though the picture is becoming increasingly complicated with the faster introduction of new services. Alongside the greater reliance on mobile technologies and data, autonomous cars and the connected home may require exclusive spectrum, adding to the “three dimensional jigsaw”.

AWS, Financial Results, IaaS, News & Analysis

AWS posts 60% boost as it creeps towards $10bn revenues

July 29, 2016 Jamie Davies

AWS has continued its promising progress towards breaking the $10 billion barrier, after reporting revenues of $5.4 billion for the first six months of 2016, a boost of 60% from the same period last year, reports Telecoms.com.

Speaking during its Q1 earnings call in April, Amazon CFO Brian Olsavsky highlighted there was a very realistic chance the AWS business would exceed $10 billion in annual revenues, becoming the first cloud infrastructure company to do so. After another quarter of healthy growth, revenues were up 58% to roughly $2.9 billion, the team are well on track to exceed the ambitious target. Progress has been healthy over the last few quarters, but the team are looking to push the accelerator harder.

“We actually see nine availability zones in four regions coming out in the next – in the coming year,” said Olsavsky. “The impact on short-term is pretty much indistinguishable from the growth that we’re seeing in our expansion of our base customers in our existing regions, so we don’t see a large step-up from the addition of new regions relative to the large and rapid growth in the business itself.”

With new data centres popping up all over the world to meet the demand of the burgeoning cloud computing sector, AWS is keeping trend, opening up in Mumbai last month, as planning nine new availability zones within the next 12 months. The impact of these new assets are unlikely to be felt during the next quarter, though long-term there the current cloud leader could reinforce its position at the top of the leader board.

“Again, we like our position, our industry leading position in the cloud space, and we’re working on things that would incent more and more customers to accelerate their cloud conversion,” said Olsavsky. “The lower prices and services that we offer, and as I said, we’ll work on things that will make it easier and easier for customers to work with us with their hybrid data centers or transfer their volume to us.”

One area of growth which could have a more short-term impact is the new FedRAMP High compliance certification, which will allow government agencies the ability to use the AWS Cloud for highly sensitive applications and workloads like patient records, financial data, and law enforcement data. Government contracts represent lucrative wins in the technology sector, which could underpin the company’s surge towards $10 billion. The accreditation also creates a useful precedent for the business if/and the team look to expand its footprint with government organizations in the international markets.

AI, fibre, Financial Results, Google, News & Analysis

Google grows (again) but ‘Other Bets’ cost the giant $1bn

July 29, 2016 Jamie Davies

Google has reported its Q2 numbers, continuing a strong run of performances within the technology industry, though efforts to diversify its overall business are not paying off just yet, reports Telecoms.com.

The Alphabet brand was announced last year, with aim of allowing the team to invest in other projects more freely, without being impeded by the advertising business. It would appear the management team are not afraid to throw R&D money at its innovation team as it searches for another billion-dollar business, as the ‘Other Bets’ segment, which includes Google Fibre and the autonomous cars projects, accounted for an operating loss of $859 million. Revenues did grow to $185 million, up 150% on the same quarter in 2015, though this number was made almost insignificant by the $19 billion generated in the advertising business.

The technology industry on the whole has been providing strong numbers over the last couple of weeks, though there has been a question as to whether two advertising giants can co-exist. With Facebook reporting significant growth yesterday, advertising revenues across the period increased 63% year-on-year to $6.2 billion, these numbers were dwarfed by Google, perhaps demonstrating there is potential for both organizations to share advertising revenues, which are decreasing in value, and grow healthily.

With regard to the dwindling value of advertising revenues, Google would appear to be combatting this with volume. CFO Ruth Porat highlighted the mobile search capabilities were the primary driver behind the year-on-year growth, though the desktop and tablet search did also grow.

Numbers such as these will grab headlines, meaning it can be easy to forget about the Google cloud business, one of the top priorities for the Alphabet business moving forward.

On the same day which AWS reported revenues of $2.9 billion for the quarter, Google’s cloud business also demonstrated solid growth. Although the numbers are not specific, the ‘Other’ revenues segment which includes the cloud business, and other services such as Google play, accounting for $2.1 billion through the three month period, an increase of 33% on Q2 2015.

“Many tremendous digital experiences are being built in the cloud today, and businesses are working to take advantage of the cloud as part of their digital transformation,” said Google CEO Sundar Pichai. “We’ve been integrating our cloud and apps products to create more unified solutions for companies large and small, and these efforts are paying off.”

Following on from Pichai’s previous comments on the role of artificial intelligence on the Google cloud platform, and the wider Google business, its importance has been reiterated once again. Machine learning is being prioritized as the differentiator for Google in a competitive technology market, and only last week the team introduced two cloud machine learning APIs for speech and natural language to help enterprise customers convert audio to text and easily understand the structure and sentiment of the text in a variety of languages.

In terms of footprint, the team are not done growing yet. At the end of last month, Google and friends completed work on a new trans-Pacific submarine cable system, which will help the team launch a new Google Cloud Platform East Asia region in Tokyo. Back in March, the team confirmed it would be investing heavily in expansion of its cloud footprint with 12 new data centres around the world by the end of 2017.

AWS has previously stated it intends to break the $10 billion barrier in cloud revenues during 2016, though Google may not be that far behind. With its history of not being afraid to invest, and the growth numbers which have been witnessed over the last few quarters, Google could be set to accelerate.

5G, Financial Results, Huawei, IoT, News & Analysis, Smartphone

Smartphones help Huawei to 40% revenue growth over H1

July 25, 2016 Jamie Davies

Huawei has released financials for the first half of 2016 demonstrating a 40% revenue boost to $37 billion, partly owing to a healthy performance in the consumer business unit.

Although operating margin for the period has declined from 18% to 12%, the company posted stronger revenue growth for the period, slightly offsetting the decline. During the first six months of 2015 revenues grew 30%.

“We achieved steady growth across all three of our business groups, thanks to a well-balanced global presence and an unwavering focus on our pipe strategy,” said Sabrina Meng, Huawei’s CFO. “We are confident that Huawei will maintain its current momentum, and round out the full year in a positive financial position backed by sound ongoing operations.”

The decrease in the operating margin reflects the progress of the larger smartphone industry, as well as the competition which is increasing worldwide. Huawei currently sits in third place in global market share of the smartphone market, though it has been investing heavily to penetrate western markets in recent months. Samsung and Apple are currently defending their position as the top two, though Huawei’s efforts to chance the mid-range market are seemingly paying off.

Set against a backdrop of declining smartphone shipments, Huawei has held onto its strong position in the Chinese market, increasing its shipments from 11.2 million to 16.6 million in Q1 2016, compared to the same period in 2015. The move increased its market share from 10.2% to 15.8% taking it to the top of the Chinese leader board, while Apple lost ground dropping from 12.3% to 11%.

While this may be seen as unsurprising in some quarters of the industry, success in the international markets is becoming more apparent. According to research from Gartner, sales of smartphones to end users totalled 349 million units in the first quarter of 2016, a 3.9 percent increase over the same period in 2015. Samsung accounted for roughly 23% of the market, whereas Apple was just under 15%. Huawei increased its share 5.4% to 8.3%, taking it to third in the global market share tables. The company is expected to continue to ramp up its R&D focus over foreseeable future.

Although the company did not detail the enterprise business units figures though that is likely to be outlined in the coming weeks. The enterprise business, which includes cloud computing, storage, and SDN products, Safe City and Electric Power IoT solutions, did announce healthy growth of 44% to $4.5 billion during its annual Global Analyst Summit in April.

In the carrier business, the role of 5G and IoT was reaffirmed, and the team will be focusing on four areas within the telco industry, business, operations, architecture, and networks. While the carrier business has been demonstrating strong growth throughout the world, it has struggled in the US after its technology was effectively banned over concerns it would be used by Chinese authorities to spy on the US. While Huawei has continually denied the allegations, it has struggled to rebound and reassert itself in the market.

Elsewhere in the industry, competitor Ericsson has been experiencing slightly different fortunes after CEO Hans Vestberg resigned following another difficult quarter for the company. Last week, the company reported an 11% annual decline in net sales with pressure continuing to build against Vestberg.

Business Transformation, Enterprise IT, Gartner, News & Analysis, skills gap

Cloud computing will impact $1 trillion of IT spending decisions – Gartner

July 21, 2016 Jamie Davies

Analyst firm Gartner has predicted more than $1 trillion in IT spending will be directly or indirectly impacted by the transition to cloud computing by 2020.

As IT spend steadily shifts from traditional IT offerings through to the cloud, a process which the Gartner team has coined the ‘cloud shift’, the rate in which enterprise organizations transition through to cloud is expected to gradually increase year-on-year. The aggregate amount of cloud shift in 2016 is estimated to reach $111 billion, though this will increase to $216 billion in 2020. The Gartner team believe cloud computing will be one of the most disruptive forces of IT spending since the early days of the digital age.

“Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” said Ed Anderson, Research VP at Gartner. “The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and “born in the cloud” providers.”

In terms of the specific segments, IaaS is the largest market accounting for $294 billion, though demonstrates one of the lowest levels of cloud shift through 2016, only representing a cloud shift rate of 17%. Business Process Outsourcing, or BPaaS, will represent the biggest cloud shift rate at 43%, though the expected market value through 2016 will be $119 billion.

Cloud Shift Summary by Market Segment

While the potential of cloud computing has been exhaustively discussed over recent years, one of the growing debates in the industry has been centred on the skills gap. Cloud requires not only new skills within the organization, but also a different approach in problem solving as well as a new business culture, should be benefits be realized. This challenge is currently being addressed by numerous organizations throughout the world.

“There is no doubt that cloud delivers unmatched business benefits in terms of usability, choice and agility,” said Angelo Di Ventura, Director at Trustmarque. “At the same time it requires wholly new skills and capabilities, and a complete IT transformation to maximise the value that businesses can gain from it – cloud can cause considerable disruption if left unchecked.

“The transition from an internet-enabled business to a digital business running in the cloud represents a huge jump for the majority of IT departments, whose existing infrastructure is designed for ‘business as usual’ operations. Ultimately, there is no one-size-fits-all model when it comes to making cloud work for a business.”

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