Market Watch

Consumers Aggressively Migrate Data to the Cloud in First Half


Personal subscriptions to cloud services reach 375 million during year’s first six months

The consumer cloud performed strongly in the first half of 2012, with the number of personal subscriptions to online storage services at the end of June already at 75 percent of the market’s projected sum for the year, according to insights from the IHS iSuppli Mobile & Wireless Communications service from information and analytics provider IHS.

The number of global consumers using cloud services after the first six months hit more than 375 million, or about three-quarters of the estimated total of 500 million by year-end. While no firm numbers exist to show the extent of the cloud in 2011 because it was relatively new and untested, best estimates put global subscribers then at approximately 150 million. Subscriptions to either free or paid cloud services will continue to climb in the years ahead, jumping to an estimated 625 million next year, and then doubling over the course of four years to reach 1.3 billion by 2017.

The cloud is a dramatic game changer in an age of near-ubiquitous mobile broadband, offering benefits to consumers and cloud service providers alike.

For consumers, cloud services are intended to manage and store user-generated data or purchased content, such as music, ebooks, pictures or videos. The content can then be seamlessly accessed and synced across devices like smartphones, media tablets and PCs.

Meanwhile, providers look at the cloud as a way to generate revenue. For instance, giants like Apple, Microsoft, Google and Amazon use their own cloud offerings to sell hardware, content and other cloud storage services. Such services are often provided at cost—or below the cost—of equivalent offerings from pure-play cloud storage providers like Dropbox, Mozy, Carbonite and SugarSync.

To compete with the big players, pure-play cloud providers adopt a freemium model in which they throw in 2 to 5 Gigabytes of cloud storage for free, and then offer tiered pricing plans for higher levels of storage. In many cases, these service providers limit the size of files that can be stored on their storage service.

The business of providing cloud storage can be costly, however.  The cloud industry will continue to lose money from pure cloud offerings, IHS iSuppli believes, and independent providers will find it extremely difficult to remain financially viable. This, in turn, provides mobile network operators with an attractive opportunity to partner with the pure-play providers and offer differentiated services.

In addition to generating revenue opportunities, cloud services can create stickiness and reduce churn among the customers of mobile operators. Users with large amounts of data stored on an operator’s cloud service are likely to be reluctant to migrate their content to another operator’s cloud service at the end of a contract period because of the hassle involved, so the cloud can be effectively leveraged as a tool to retain customer loyalty.

All told, the winners in the increasingly tight race among mobile providers to entice consumers to their cloud will be those that can offer a personal service supporting diverse mobile devices and computers on their network, with huge revenue growth potentially at stake.

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