Yesterday this site looked at the telcos’ battle to diversify in a world of declining sales and margins.
One of the areas where telecommunications providers failed dismally was in data centres – what should have been a relatively easy area for them to move into turned out to be an industry that was culturally alien to them.
This week showed how costly that failure was for the telcos as AWS, Microsoft and Google all reported huge growth in their cloud revenues. Microsoft’s cloud business nearly doubled in value while AWS grew almost 50%.
While for Google, the company is still grossly dependent upon advertising for its profits, at least their cloud services are the fastest growing part of their business. Their struggle to diversify is beginning to show some results.
The telcos though can only look and wonder at what might have been.
Dear Paul,
Sometimes you are interesting in sharing your thoughts, but sometimes you are completely off Mark . . .
Like in this case:
Telecom operators have not been very successful in selling other than traditional telecom services and ‘ bit pipes’, an essential business in which they are hardly challenged. And maybe their profit margins are under pressure, the growth potential in ‘bit pipes’ including in mobile and wireless are significant. If you believe only in innovation then you may arrive at misleading conclusions like the telecom operators are in trouble (but then, you also don’t eat bread, drink coffee, beer or wine, since these are old fashioned products without significant innovation . . .)
The application services domain has long been dominated by others than telcos, e.g. E-mail, social networks, etc.
While this may be a missed opportunity for telcos, it has helped to keep the market structured and competitive: remember that ‘long ago’ telcos were split up or put under strong regulatory regimes to break their stranglehold on business communications.
This also led to techs not being allowed, or becoming hesitant to again enter in the application services domain.
Maybe you should start worrying about application services domain giants trying to enter in the telco domain.
Cees