Communication service providers (CSPs) committed $8 billion for cloud-related projects in the first six months of 2011, but recent acquisitions won’t boost cloud revenues overnight and service differentiation remains poor, according to Informa Telecoms & Media’s Telecom Cloud Monitor.

CSP generates less than 5 percent of its enterprise revenues from annuity cloud services. Despite growing customer wins, some CSPs need to muster 10-fold growth to hit publicized cloud revenue targets.

Of the 10 acquisitions and 21 investments announced in the first half of 2011, 80 percent involved data centers, highlighting CSPs’ desire to bulk up on physical assets to sell virtual goods.

Recent multiples paid for so-called cloud assets aren’t at Enron Era levels, but they are generous. More worryingly, the companies acquired – although growing – generate a sixth or less of their revenues from pure cloud services,” said Camille Mendler, principal analyst, Informa Telecoms & Media.

Many CSPs are swapping their dumb-pipe problem for a dumb cloud: 70 percent of the 88 cloud services launched in the first half of 2011 were generic productivity and storage applications, often involving partners claiming a major share of the takings.

Software as a service is a loss leader for most CSPs: Partners like Google, Microsoft and Salesforce offer great tools, but they want their pound of flesh. Profitable differentiation lies in securing seamless access to enterprises’ digital assets, not just SaaS resale,” added Mendler.

CSPs should not to squander their powerful differentiators in the cloud marketplace. They must create high-value community clouds to serve the needs of specific vertical industries, secure cloud access via any device in audited compliance with local laws and mobilize the cloud to transform business processes encompassing people and embedded devices.

By Telecomlead.com Team
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