As mobile operators invest heavily in 4G networks, the question remains how operators will maintain profitable business models and differentiation as the demand for data consumption grows and the over-the-top players, including Google and Apple capture the most profitable parts of mobile services value chain.
The arrival of high-speed 4G networks combined with emerging mobile cloud technology is fueling speculation that operators can recapture mobile services revenue through unique telecom capabilities and more open developer platforms and ecosystems. However, while mobile cloud is poised to be a game changer for operators, many operators do not have clear strategies and plans for leveraging the power of their 4G networks combined with mobile cloud services.
Mobile cloud market forecasts anticipate exponential growth during the next five to ten years, but securing market opportunities presents uncertainties as operators, partners and competitors all aim to control the most profitable segments of the mobile cloud services value chain. The over-the-top (OTT) players, including Google and Apple, continue to put pressure on mobile operators' business models as mobile data traffic grows with the adoption of smartphones and tablets, and related applications and content services.
The demise of mobile operators by way of the dumb-pipe syndrome has been debated for many years as the intersection of mobile devices, 3G networks and the Internet disrupted a fairly predictable industry in terms of business models, time to market, and the competitive environment. To support the rapid uptake of data consumption and oncoming of cloud-based offerings, operators are investing heavily in 4G LTE and 4G WiMAX as the next major infrastructure milestone .
Operator Plans for Branded 4G Cloud Services
Based on a global study and survey, Maravedis asked mobile operators to identify their plans to offer branded communication services based on mobile cloud technology as part of the 4G network environment.
Figure 1: Plans for offering branded 4G mobile cloud services
Social networking/messaging was the top ranked mobile cloud services. The top ranking is not surprising as social networking is often viewed as the 'glue' to bring together a variety of communication, collaboration, content, presence, location, navigation, entertainment, shopping, and gaming services.
Many operators and their vendors are focusing their mobile cloud efforts on the enterprise business market, which is expected to represent the larger and more profitable revenue opportunity for mobile operators. The opportunity in the enterprise market spans a range of horizontal mobile cloud services, along with specialized programs and services in vertical markets and M2M solutions.
As shown in Figure 2, in regard to return on investment and revenue, 38% of the respondents identified the enterprise market as a major focus, while 30% identified the enterprise as having equal focus with the consumer market.
Figure 2: Enterprise market and business users
A range of communications and messaging services were identified as current or future mobile cloud plans. Secure access was also ranked a top service for the enterprise market. With the rapid growth of smartphones and tablets in the workplace accessing corporate email and business applications, the enterprise market is under pressure to address the security exposures.
One of the biggest factors impacting the user experience in upcoming years will be the support of multiple devices and the portability of applications, services and content among the devices. The rapidly increasing customer expectations for mobile operator support of multiple personal devices will also fuel the debate about whether or not app stores from Apple and Google are constraining portability among devices from different manufacturers.
Figure 3: Mobile cloud plans for the enterprise market and business users
Many in the telecom industry believe operators can beat the OTT players by providing higher-quality localized services supported by superior customer service and secure private data connections. Many in the telecom industry believe consumer and business trust of OTT services will diminish and shift opportunities toward the operator model.
However, at this inflection point, mobile operators have to be extremely cautious to avoid fixing their 'dumb pipe' problem with a 'dumb cloud' solution by racing into commodity cloud services that provide very low margins and lack unique telecom-related differentiation. Further, many operators and their vendors and partners are focusing their mobile cloud efforts on the enterprise business market, which is expected to represent the largest opportunity for mobile operators to create sustainable differentiation and profitable growth.
Operator Infrastructure and Enabling Technology
While the vendors are taking different approaches to enable the operator cloud, the common theme is that the network is essential in enabling carrier-class cloud services to support real-time applications and enterprise cloud services with service level guarantees. Telecom vendors are focused on exposing, or enabling the use of network assets and unique telecom capabilities to allow the operator and its partners to develop more robust and differentiated cloud services to compete against Amazon, Google and other public cloud providers.
The key question and uncertainty for operators is defining what a carrier-class cloud platform is and what infrastructure and technology is needed to truly enable differentiated cloud services. The wild card in the equation for developing operator cloud technology is in the use of OpenStack, the open source cloud platform that is attracting the attention of many vendors and operators as the foundation for battling Amazon and Google in cloud services.
The topics of mobile cloud services and carrier-class cloud infrastructure are expected to take center stage at Mobile World Congress, the largest annual wireless conference that will set the tone for 2012 industry directions.
Bill Lesieur is the senior analyst for mobile cloud for Maravedis.