Have telcos (and their shareholders) really grasped how the advent of mainstream cloud computing could ultimately transform their industry? In most cases, I think not. In general, telcos’ top management teams have yet to articulate a compelling vision of where their company will play in a hyper-connected, cloud-centric world.
Clearly, cloud computing – the provision of hardware and software on a pay-as-you go basis – depends on rock-solid connectivity. Telcos provide connectivity, so they should be pivotal players in the cloud market. But right now many of them seem to be on the periphery, particularly here in Europe. In January 2012, research firm Informa said that European operators accounted for only 7% of the $13.5 billion of cloud investments by operators globally in 2011. “European operators are being outgunned in cloud infrastructure,” wrote Carmille Mendler, principle analyst at Informa, at the time.
Analysts at Citi Research take a similar view. “In Europe, some telecom operators are lagging behind their US counterparts,” they wrote in a just published report in cloud computing. “In many cases their approach to cloud remains too fragmented and sometimes defensive rather than driven by a strategic vision.”
The reasons for European telcos’ cloud caution seem to be manifold: Regulatory uncertainty and inconsistency, economic woes, privacy concerns and (probably) short-termism. For most European telcos, cloud computing isn’t going to move the revenue needle in 2012 or 2013.