Tag Archives: Telecom

Diffusion: A New Model on the Cloud Catwalk

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Prada did it with Miu Miu; Dolce & Gabbana with D&G

Now Verizon’s $1.4 billion purchase of Terremark applies a business model from the catwalk to cloud computing: The launch of a ‘diffusion’ line.
Diffusion lines – affordable merchandise from luxury labels – are big business in fashion.
Correctly marketed, they create a virtuous circle of demand between couture and main street buyers, and expand a designer’s overall revenues through direct sales and licensing deals.

Why Verizon might be smarter than you

The diffusion brand has got to be cool. And in operating Terremark as a standalone business, Verizon is gaining a cooler cloud brand than its own in certain customer segments and verticals.

In 2010, Verizon anointed Terremark as its partner for cloud services to notoriously fickle small and medium-sized businesses. Terremark can sell direct to SMBs, but also through the significant wholesale relationships it enjoys with other telcos, ISPs, integrators and IT services firms. They buy services including collocation, hosting, IT support and IP interconnect from the Miami-based firm.

Neither is this just a high-low play. Last year Verizon contracted 25,000 square feet of Terremark collocation space for its U.S. government clients because Terremark held the specific security certifications that they required. Today, almost a quarter of Terremark’s revenues come from the Feds – a segment already spending seriously on cloud services.

Why it’s still a gamble

The U.S. telco is paying a high price. Terremark’s revenues are just shy of $300 million, but only about 10 percent are cloud related, although growing fast. Terremark has generated a net loss for more than three years; and both firms carry heavy debts.

Against pure-play cloud providers like Amazon Web Services, CloudSigma and GoGrid or integrators like CSC, IBM and Logica, telecom operators like Verizon, Orange Business Services and SingTel are competing against vastly different opponents: As cloud first movers, pure-plays have won mass market recognition, while integrators have won trust for complex cloud migration services. Nor should IT vendors like Microsoft, datacenter operators like Rackspace and variations in between like Savvis be discounted.

The integrated telco should be king of the cloud

Yet owning CAPEX-draining datacenter and network assets – both fixed and mobile – should be a dream ensemble, particularly when married to sound security expertise.

But that’s logic speaking, not the street. And in a chaotic cloud marketplace, hedging a bet with a diffusion model is cannily fashion-forward.

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Cloud Culture: How Cloud Attitudes Differ in Europe and North America

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Based on the work I have been doing in cloud computing Europe, Asia/Pacific, and North America, people have been regularly asking me the questions, “How are attitudes towards cloud computing different in Europe?” and “How has cloud adoption differed in Europe from it’s adoption in the United States?” In fact, I was asked back in September to write a blog on the differences I have seen in cloud adoption in Europe versus my experience in North America.

I’ve been putting this off for a while, however, because making such generalized comparisons can be very dangerous. There’s always a counter-example to any general statement I might make. In the spirit of attempting to provide some useful insight, I have decided to attempt to write a blog entry and answer those questions as 2010 comes to an end. Be warned however that my answers cannot possible be THE answers—just my experience.

Innovation and Regulation

The most striking recurring theme I’ve encountered when working in Europe as opposed to the United States is how the two each approach the challenges of cloud computing.

As with any new technology paradigm, cloud computing introduces ways of doing things that challenges the models to which we are accustomed. I’ve discussed many of the key challenges in this blog—security, privacy, governance, and more. There are answers to all of these challenges, but the way in which people go about responding to these challenges seems to differ fairly radically between the United States and Europe.

When faced with a challenge like on of the ones described above, I often hear Europeans ask what kind of regulations the government can craft to help address the challenge. I’ve heard this a number of times in Europe, but never have I heard it in the US. Instead, I mostly hear from Americans either FUD (cloud… security… bad…) or I hear the question, “Who is solving that problem?” When Americans ask who, they mean “which entrepreneur”, not “which government agency”.

Cloud Adoption

Though there have been some important entrepreneurial exceptions, the United States has been largely responsible for early stage cloud adoption. By the most simplistic measure, Europe is about 12-18 months behind the United States in cloud adoption. In other words, Europe is where the United States was in mid-2009. As was the case in the United States in 2009, most of the companies adopting cloud today in Europe are Web 2.0/SaaS businesses or companies leveraging the cloud for dev/test. Though enterprise adoption began in earnest over the course of the past year in the United States, it’s barely in it’s most nascent stages in Europe.

The exception to this rule in Europe and, in general, across the world lies in the telecommunications sector. The major telcos in the United States have yet to offer the market any kind of compelling cloud computing vision on strategy. Companies like BT and Orange in Europe and KT in Korea, on the other hand, are significant drivers of cloud adoption in their respective markets. I have no idea what this means for the future of the cloud, but I do find it to be an interesting distinction that is bound impact the cloud world at some point.

Where Does This Take Us?

The cloud functions best without borders, but the world in which the cloud operates still has a number of cultural and jurisdictional boundaries to overcome. I suspect the cultural issues create a risk for breeding new jurisdictional issues. If you really want to operate at cloud scale, however, you will need to figure out how to bridge both.

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Business Turns to Hosted PBX

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Businesses are rapidly switching on to the benefits a hosted private branch exchange (PBX) – or switchboard – environment.

That’s according to Graeme Victor, CEO of telecommunications solutions company Du Pont Telecom, who says several organizations have already adopted the new technology that aims to expand voice-over-Internet protocol (VOIP).

Victor says with the growth and maturation of the data networks and the changes in the interconnect agreements, it is now possible to run a company’s telecommunications with only an IP phone on each desk, resulting in capex and opex savings of some 35%.

He points out that VOIP-based PBX solutions deliver a combination of cost-effectiveness, scalability, and robust features, adding that they enable businesses to streamline communications, improve customer responsiveness and increase employee productivity; all while reducing overall telephony costs.

In contrast to a premises-based PBX phone system, notes Victor, VOIP-based solutions are owned and managed off-premises, and leased to a customer. This eliminates purchasing, installing, and the need to manage a full-featured IP or traditional PBX phone system, he points out.

”A business does not need to make even a nominal investment in equipment or infrastructure; nor does it have to worry about operating, maintaining or upgrading its network to support VOIP,” he says.

“Hosted PBX offers a remarkably cost-effective way for an organization to get high-end PBX features and all the business advantages of IP telephony exceptionally affordability and without risk, regardless of whether the company has one or 100 employees,” adds Victor.

Victor explains that a business with multiple branches and sites needs only one centralized attendant console to fulfil the traditional ‘switchboard operator’ role, should this be required.

He says this means any Internet-access line can become an extension of the office. “If employees’ laptops or mobile phones are configured as their ‘soft’ phones, they simply have to connect to an available Internet connection and immediately become part of the office telephony system, reachable on their office extension.

“It doesn’t matter whether they are at home, in the office or in traveling abroad – they will have access to all the functionality of the company PBX system, including automatic least cost routing of all outgoing calls,” Victor explains.

About – meshIP Cloud Computing Blog

meshIP, Cloud Computing in Dallas, TX

The meshIP blog is a curated compendium of news, opinion and information about cloud computing, virtualization, VoIP and hosted PBX technology for our clients, prospects and the cloud curious. It is managed by Brian Byrne, the founder and a Managing Partner of meshIP. We are a Dallas, TX firm offering cloud computing, hosted applications, virtualization, hosted PBX and specializing in company formation, business plan development, funding and growth strategies.

Brian is an accomplished executive with senior management experience in all facets of the technology, telecom, cloud computing, SaaS, CRM and social media industry. He has proven success in developing, financing and executing strategic plans as well as launching new ventures. His credentials include an MS from the School of Computer Science at DePaul University as well as an MBA in Marketing and Management Strategy from the J.L. Kellogg Graduate School of Management at Northwestern University.

Specialties:

His experience and expertise includes cloud computing, hosted PBX, virtualization, social media, business formation, venture funding, technology services go-to-market strategy development, SaaS, CRM, product development and launch, financial modeling, new market entry, sales, business development, and sales management.

To learn more about our approach to technology strategy, check out this video presentation where you will learn how the consumerization of technology has made it possible to run an entire organization from a simple internet connection.