European telcos aim to strike back in cloud market

European telcos continue to move into cloud computing with three recent announcements demonstrating the continued expectation that it can provide a significant future revenue stream.

The need for them to do so is clear, as new research has highlighted just how far behind Europe is in the global cloud market.

Last week Telefónica Digital – the global operator’s newly formed London-based business unit – announced an exclusive partnership with cloud-based mobile app developer FeedHenry.

The plan is to launch a subscription-based platform that enables businesses to build their own mobile apps. TD chairman & CEO Matthew Key said a test launch in Ireland had landed the operator companies such as Aer Lingus, Diageo and PWC as customers.

“Demand for mobile application development and management solutions has exploded as businesses of all types and sizes recognise the importance of mobile apps in driving business success,” said FeedHenry CEO Cathal McGloin.

Telefónica's O2 mobile brand will provide a route to market and act as a one-stop-shop for the service, managing the contractual and billing relationship with the customer.

TD said the service will be launched by O2 in the UK during Q1 2012 before being rolled out to other Telefónica markets.

At the other end of the enterprise cloud spectrum, Cable and Wireless Worldwide announced last week that it was collaborating with data centre specialist Equinix on an infrastructure-as-a-service strategy.

In a statement, C&WW said the collaboration would bring together its hybrid cloud solution with Equinix’s network ecosystem of 680 network service providers and 99 data centres to deliver a one-stop shop for global enterprises.

"Telcos are natural providers of enterprise-class infrastructure services,” commented C&WW’s Nick Lambert, MD of wholesale, mid-markets and global markets.

“Our ambition is to create an ecosystem of best-of-breed solutions from different service providers that can deliver a flexible and risk-free cloud computing roadmap for customers."

Specifically, C&WW said the collaboration would help companies reduce complexity, minimise infrastructure costs and increase business agility.

It’s not just the enterprise space that is getting attention from European telcos. Telecom Italia announced in the run up to Christmas that it was launching a cloud storage service dedicated to the consumer market.

Called TIM Cloud, it enables customers to use up to 1GB of memory space to save photos, music and videos free of charge. To activate the service, customers need to download an app on their smartphone.

These three approaches demonstrate clearly that the cloud pie can be sliced in several different ways depending on where the skills and priorities of the operator lie.

Both Telefónica and C&WW appear to have chosen their strategies wisely. The former has decided to leverage the newly formed digital unit’s desire for cutting edge services alongside its stable of mobile brands, while the latter has been focusing on cloud for a while as it looks to leverage its position as owner of the UK's biggest fibre network dedicated to business users.

The TI offering looks the weakest on balance as it is entering territory – that is clearly not its traditional forte but that of IT companies – on its own without a partner, unlike Telefónica and C&WW.

The need to choose the right cloud strategy is becoming ever more important for European telcos.

New research from Informa’s Telecom Cloud Monitor, released today, has found that European operators accounted for only seven percent of the €10.5 billion that operators committed on cloud assets in 2011 globally.

“European operators are being outgunned in cloud infrastructure,” said Camille Mendler, principal analyst at Informa Telecoms & Media. “Although they are working to stimulate local demand, their investment strategy remains cautious.”

Incredibly, operators launched a new cloud service every other day on average around the world in 2011.

However, uncertainty around European security and privacy laws, coupled with continuing economic weakness, are gating cloud investment, according to Mendler.

She added: “It’s urgent to defuse concerns about cloud computing in Europe to drive market development. European operators are major players in this endeavour with their trusted brands and sales outlets.”

Eyes now turn to the European Commission, which has said it aims to define a common legal framework for cloud computing later this year.

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