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Is cloud computing the carriers' to lose?

Carriers want cloud business. And when it comes to choosing a service provider, they could be a natural choice for enterprise customers.

Weekly cloud computing update

IT pros might not like their telecom provider, but they do trust them to deliver service without interruption. And that gives these carriers a huge advantage over online book seller and other cloud computing providers desperately wooing corporate customers.

But just how smart is the carriers' strategy to delve into cloud computing?

When it comes to trust, IT pros will choose the service provider.


There's no question enterprise IT departments are interested in cloud computing services. Our latest cloud computing survey, which polled over 300 IT professionals from companies of all sizes, revealed that almost 70% have budget for cloud services in 2011. So can the carriers deliver?

Randy Bias, founder and CEO of CloudScaling, said the U.S. carriers have the idea that there's a business model adjacent to Amazon Web Services (AWS) called enterprise cloud computing. It's built on expensive products from legacy IT vendors and so far there hasn't been much adoption. Terremark's enterprise cloud services are priced higher than those of AWS and there's a monthly commitment on pricing instead of the "pay as you go" model.

Bias is adamant that there isn't a separate enterprise cloud business model, just one winning formula: the AWS model of commodity cloud computing. Ironically, of all the companies that have a shot at dominating the cloud, it's the carriers that really understand commodity services. But Bias said the problem is that they aspire to more.

How will the carriers conquer cloud?
CloudScaling built the cloud computing infrastructure for Korea Telecom, Korea's largest fixed-line operator. It's built with standard, low-margin hardware, uses open source software and is designed for failover, rapid horizontal scaling and high server-to-admin ratios, like AWS. Verizon-Terremark took the opposite approach and built its cloud infrastructure on VMware software and EMC hardware.

Tom Nolle, founder and principal analyst at Cimi Corp, said it might take the U.S. carriers some time to get their act together -- they are giant organizations, after all -- but once they do, he believes they are the natural suppliers of enterprise cloud services.

The added value they bring on top of basic IT infrastructure services -- through integration of mobile users and applications, secure network resources, billing systems, SLA knowledge and geographic reach -- is more than Amazon can offer, he said.

And when it comes to trust, IT pros will choose the service provider. When their job has been to keep the lights on for 20 years, they'll stand by the vendor they know, not the risky operator with no track record.

But if Amazon Web Services continues at its current rate of growth, it will be sitting on a $10 billion infrastructure cloud services business by 2016, according to Forrester Research. That's a utility computing service like we've never seen before.

Jo Maitland is the Senior Executive Editor of Contact her at

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