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Cloud Computing Could Mean Big Opportunities in Enterprise IT for Wireless Service Providers

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The cloud computing boom is yielding major opportunities for wireless service providers, allowing them to cash in on a market where consumer and enterprise spending is set to expand nearly fivefold during the next five years to reach more than $100 billion in 2015, according to new insights from the IHS iSuppli Mobile & Wireless Communication Research Area from information and service provider IHS (NYSE: IHS). 

Consumer and enterprise spending on the public segment of the cloud is projected to rise to $110 billion in 2015, up from $23 billion in 2010. Public cloud spending will climb to $35 billion this year, up 52 percent from 2010.

The public cloud represents the traditional concept of cloud computing wherein services, software and storage are offered over the shared, public Internet infrastructure. This contrasts with the private cloud, which is established for the sole use of a single organization—and the hybrid cloud, which combines elements of public and private clouds.

Major Technology Firms Have Their Heads in the Cloud
With marquee names like Google, Amazon and Dell already providing their own offerings, interest in the cloud is at an all-time high. Further stoking market fervor, Apple on August 1 announced rates for its widely anticipated iCloud service to be unveiled this fall, which will allow customers to sync and share music, photos and books on Apple devices like the iPad, iPhone and Mac computers. Nine days after the Apple announcement, Amazon on Aug. 10 said its Kindle cloud reader would let users peruse more than 950,000 Kindle e-books.

 “Cloud computing is a convenient, on-demand service over the Internet, through which users can pay for applications or storage space provided by a third party based only on the amount used,” said Jagdish Rebello, Ph.D., senior director and principal analyst for communications and consumer electronics at IHS. Usage on a cloud network is scalable, rapidly elastic, dynamically provisionable and minimally managed, allowing increasing demand to be met without users having to make significant upfront investments in any new hardware and capacity. Also, data stored in the cloud can be accessed anywhere and shared seamlessly with other qualified users at any time, across multiple devices.

“Cloud computing, while still having to address issues of compliance and security among others, is a game changer and a really positive paradigm shift from the perspective of any user,” Rebello added. “Imagine not having to commit ahead of time for such things as software expenses, storage capacity or application licenses—and instead paying for only what you use and dynamically updating the use of whatever you need.”

Clouds can be personal and geared toward the consumer—such as those offered by Apple, Google and Amazon—for users to store and manage their own data; or they can be oriented toward the enterprise for business operations.

Cloud Models and What Wireless Operators Can Bring to the Table
Cloud computing prospects in the enterprise space appear especially exciting for wireless service providers, which are also known as mobile network operators (MNO). MNOs not only possess a trusted brand, they also already operate in the enterprise space by providing telephony and network connectivity support. But offering web-based applications and virtual storage services—together with enhanced data security and contingency backup plans—could boost their portfolios even more, allowing them to compete with traditional IT service providers.

And because MNOs possess important information about customer preferences, they can present more personalized packages, adding value to the overall service. MNOs also have billing platforms for charging customers based on usage, enhancing ease of use.

All told, cloud services can help MNOs monetize data more successfully in their quest to increase revenues. However, operators need to move fast because the competition is progressing at Internet speed.

Cloud participants can achieve higher margins if they employ a service model that offers an entire ecosystem including software, a platform of services and infrastructure—as opposed to just providing the discrete parts making up the whole. The other option would be to combine elements from separate service models, or to offer standalone service models.

Individual cloud models include platform as a service (PaaS), in which infrastructure is offered alongside a suite of user-required services; software as a service (SaaS), where the provider’s applications are made available; and infrastructure as a service (IaaS), in which cloud providers make equipment like hardware, software and network components available to customers.

In particular, cloud computing could appeal strongly to the enterprise segment because costs can be controlled. If a business downsizes, it does not need to contend with losses related to upfront costs or charges that go into continued maintenance of infrastructure. If a business expands, it can simply pay more for the additional services it needs.

Cloud computing carries its own risks, including issues relating to data security, privacy backup and recovery, and laws governing locations and data retrieval. As a result, online computing and storage in a cloud service potentially could be a greater concern for the enterprise than the consumer, necessitating careful evaluation of benefits vs. tradeoffs.

Learn More > IHS iSuppli Mobile & Wireless Communication Research Area

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