Recently The Unreasonablemen posted a critique of one of Krish’s posts. I’ll leave aside some of the more caustic comments he makes but focus on the thrust of what he said.
To paraphrase the post, The UM is critical of those cloud computing commentators that seem to dismiss as a minor point the fact that cloud computing still requires a network on which to deliver it. The post highlights the fact that the current market for cloud computing is (depending on whose figures you use) possibly 5% of the total telecommunications market. As such The UM points out that;
Cloud computing is a parasite on the networks of these Telco’s. But what they don’t realise is that their current business model exist solely at the benevolence of these Telcos. ..The internet (and all other networks) costs loads of money to run. The average Telco spends 10-15% of the revenue on capital. That’s $100-150bn spent per annum to provide this network. Spends of this nature need to be recouped, & cloud computing companies better understand this because they are going to be asked to pay their way, guaranteed
I’ll come back to the telco specific comments a little later but I was interested to read a post by jim Donovan on En Avant in which Jim makes the comment that;
despite their enthusiasm, many IT people remain balanced and open to the pros and cons of their preferred solution and others…some IT operatives and commentators become increasingly one-eyed in
favour of their chosen way and blind to the merits of others, further
inflamed if the object of their disdain does anything untoward
It’s a valid criticism, and one which Jim so rightly points out can be cast down both sides of the spectrum. From legacy vendors saying that the cloud is pure hype and seemingly a risk to all that is robust and stable, to those on the evangelist side of the divide who say that everything will eventually find its way to the cloud. Jim gives a number of examples of the same us vs them phenomenon (most of which I’m happy to say were well before my time);
Personally I join Jim and other in being somewhat pragmatic about all this. I believe there are distinct business advantage to using cloud services – for the very same reason that it’d be ill advised for companies to own their own electricity or water infrastructure, so too does it make little sense to own some part of their computing requirements.
That said, there are some mission critical, core competence and point of difference functions that are best left off the cloud. So where do we pidgeonhole those sorts of areas?
Luckily The Unreasonablemen gives us some answers, no doubt based on their years of telco experience.They state in no uncertain terms that the telcos will start to leverage end users demands for end to end SLAs (and not just uptime guarantees). With web delivered services this isn’t possible – the web being, as it is, an amalgam of multitudes of different facets. However what telcos have is an existing network that could be leveraged by way of private connects and aggregations of cloud computing offerings. To borrow (and twist) a Microsoft term – telcos are perfectly positioned to go for a S+S play – software plus services but with one of the services being end to end delivery.
The Unreasonablemen therefore see a segmentation occurring in the cloud computing market as detailed in the diagram below.
It makes sense – telcos have a network already in place, they understand providing services on a recurring revenue basis, and they’re comparatively good at providing high levels of reliability. The question however that remains in my mind is whether telcos will really understand the implications of the changing landscape, and be able to roll out cloud computing product mixes with sufficient speed to satisfy the market – before alternative providers, with alternative network options, get to scale. Having said that however, telcos are mass market players and it could be argued that telco release cycles are not entirely dissimilar to mainstream adoption – case in point being the mass uptake of telco supplied email in the 90s.
So… the bottom line is that the cloud is here and will continue to grow in importance, but do not discount the strength that private networks and (perhaps – I’m an evangelist after all) on premises delivery will continue to exert.
I think Paul (aka Unreasonablemen) has a few conceptual problems:
– Cloud computing is a parasite on the networks…
– Telco’s own the customers…
– Comparing Telco investments to railways…
Anyone that takes the approach of “owning the customer” is heading the wrong way. SaaS customers are parasites to the same extent passengers on those trains are: they are the source of revenue for the train companies / telco’s. Cloud computing generates demand for the telco’s services. If this is so difficult to accept, may I remind everyone of the Telco Crash of 2002…
By the way, you can no longer find the “own the customer” and the railway references in the Unreasonablemen’s post. He deleted them. Now, that’s an abosulute no-no, especially when you write a “deliberately provocative post”. Blogging 101: own what you wrote. Don’t delete. That is what
strikeoutis for. (Update: see correction a few comments down)Finally, since Paul refers to these cloud bloggers as high on fumes, I suppose that includes this CloudAve contributor, too 🙂
Ben, I decided not to respond to his post because I saw no merit in responding to a biased opinion. Since you have brought the topic to the forefront of Cloud Avenue, I thought I will offer my thoughts here.
When I read his post, it reminded me of three things I have encountered in my life
1) Businesses in socialist India who thought they owned their customers because there was no free market competition
2) Microsoft who thought they owned its users because of the monopoly like status it enjoyed in the traditional desktop world
3) American telcos who thought (and some of them are still thinking) they owned their customers.
We know what happened (happening) to all of them. Those socialist era businesses vanished in thin air. Microsoft is becoming irrelevant in today’s economy and the telcos are seeing their bottom break out.
Zoli nailed it exactly. No one owns the customers. We have gotten rid of slavery long back in this world. If companies think that they own customers, I can only laugh at them. It is time they realize that they are only given the privilege to serve the customers. Many companies have realized it in a bad way and telcos are on the path to realize the same.
If telcos cannot innovate in their business models to offer the pipes needed by SaaS users, they will go to irrelevancy faster than what many expect. Already, VOIP has taken them out on the voice front and if they treat the data customers as parasites, I will be happy to write their obituary here at Cloud Avenue soon.
Zoli & Krish
I also said i’m a big believer in cloud computing. Check the comments on Krish’s post, i stand by that. I just believe in a different version of that built on my discussions with clients and where I see cloud computing going too.
The take out message I was offering up is this. You live in the clouds, literally. That puts you way, way, way to the left on the adoption curve. In doing this I find that SOME of your thinking lacks realism. My post was meant as a jolt to bring you some of that.
Zoli’s points about telco’s making money is one of them. SaaS customers pay their way, Saas provider do not, hence my point. If the telco’s cannot sustain the investment required to provide the pipes (and god knows most of them could be more efficient) then who will do it? If no one does then how does SaaS as you see it survive?
As with all my posts, I intended to provoke debate, nothing more
And finally I would like to clarify for Zoli. There never was a railway reference in my post, instead it was a comment here on cloudave which i believe is still here
http://www.cloudave.com/link/busting-the-microsoft-cloud-computing-myth?ticket=3029d5cda4a07ef7fa4a9e76147ce9c3
Paul,
I mistakenly assumed you had deleted parts of your post – apologies for that. Your railway reference as well as ‘owning the customer’ is here in a comment.
That said, the comment left here and your own post together reflect your views, so contextually I maintain what I said above.
Thanks for the clarification.
Zoli,
Agred they do reflect my views. Appreciate the apology and acknowledge the integrity that you show.
I would say two things. I have asked on my blog previously about customer ownership, and if it even mattered, I didn’t get to a point where i am satisfied with the answer.http://unreasonablemen.net/index.php/Blogs/Does-owning-the-customer-matter-in-a-SaaS-world.html
Secondly none of the response above address any of my points. To me the just say “thats old world thinking”. I believe i have presented counterfactual to your position (IF), i think they need addressing.
Cheers