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Railroad Cloud Computing

Telcos Can’t Ignore Personal Cloud

The personal cloud market is expected to grow rapidly, despite already being crowded. Large Internet and consumer electronics companies such as Microsoft, Google, Amazon, and Apple are all vying for market share, as are specialists such as Dropbox and Box. In addition to being highly competitive, personal cloud is a tough business from which to generate direct revenues. The combination of intense competition and low direct revenue opportunities will prompt many telcos to ask themselves why they should bother to invest.

Telcos cannot afford to leave personal cloud to OTT players

As the central depository for an increasing proportion of our personal data, media, and content, the personal cloud will become an essential element of the digital consumer lifestyle. As high-speed broadband access becomes more widespread, everything will move to the cloud. Personal data, content, media, information, and communications will all be stored, accessed, shared and manipulated in the cloud. They will be accessed by a range of applications and available to users whenever and wherever they wish. The supplier of the personal cloud will therefore play a central role in our digital lives; by not investing in this space, telcos risk leaving OTT players free to dominate it.

Nonetheless, the competition from the big OTT players means that investing in personal cloud can be a daunting prospect for telcos, especially tier-2 players. One option is white-label solutions that allow them to quickly and cost-effectively develop and launch personal cloud solutions; these are already on the market and are trusted by a number of telcos.

Partnering with OTT players is also a route already taken by some. Although this option dilutes the telco’s own brand to some extent, a number of advantages make such alliances worth considering. In addition, telcos have a number of key attributes, such as 24/7 customer service, consumer trust, existing billing relationships, and a wide portfolio of access, communication, and media services that they can leverage to differentiate their services.

With so many free options readily available, it is clear that it will always be difficult to make money from independent cloud storage solutions. However, telcos can tie their offerings into wider bundles of value-added services that, if positioned correctly, will both drive revenues and reduce churn.

The key to success, however, is customer engagement. Consumers may adopt services because they are free or come as part of a bundle, but if they do not regularly use them then they will not be engaged with the service and will fail to see the true value. To increase engagement, telcos must make personal cloud about more than storing the odd photo or document. They must open their cloud solutions, ensuring that they work with a greater number of their own services and applications as well as those of third-party companies.

For further insight into the personal cloud market and Ovum’s recommendations for telcos, please see the report Personal Cloud: Telco Strategies (TE0003-000842, March 2015).

Michael Philpott is practice leader for consumer services at Ovum.
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