Telcos Generate Less than 5 Percent of their Enterprise Revenue from Cloud Services: Informa

In the first six months of 2011, communication service providers (CSPs) spent around $8 billion for cloud-related initiatives.

But recent acquisitions are unlikely to improve cloud revenues and service differentiation remains poor, according to Informa Telecoms & Media’s Telecom Cloud Monitor.

CSP (News - Alert) generates less than 5 percent of its enterprise revenue from cloud services. There is a growth in customer wins. But some CSPs need to achieve 10-fold growth to achieve cloud revenue targets.

Of the 10 acquisitions and 21 investments announced in the first half of 2011, 80 percent involved data centers, highlighting CSPs’ desire to bulk up on physical assets to sell virtual goods, according to Informa (News - Alert).

“Recent multiples paid for so-called cloud assets aren’t at Enron Era levels, but they are generous,” said Camille Mendler, principal analyst at Informa Telecoms & Media (News - Alert), in a statement. “More worryingly, the companies acquired – although growing – generate a sixth or less of their revenues from pure cloud services.”

70 percent of the 88 cloud services launched in the first half of 2011 were generic productivity and storage applications, often involving partners claiming a major share of the takings.

Informa suggests CSPs not to squander their powerful differentiators in the cloud marketplace. They must create community clouds to serve the needs of specific vertical industries, secure cloud access via any device in audited compliance with local laws and mobilize the cloud to transform business processes encompassing people and embedded devices.

The Informa tool tracks the cloud-related activities of 90 CSP groups worldwide, including their interactions with more than 240 cloud-related equipment, software and services vendors.

Recently, a report Research and Markets said that the North American Enterprise Mobile Cloud Computing market is likely to grow at a CAGR of 12 percent. The report focuses on North America and indicates that the market is currently driven by increasing demand for mobile and remote communications.

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