There was an article the other day by Jeffrey Kaplan on Seeking Alpha, asking the question “Can Telcos Dominate the Cloud Computing Industry?” The question was prompted by a blog post from an AT&T exec. My gut reaction to that title was “Hell no”. There are good reasons why few if any telecom carriers are in the dedicated server business, and why there is a huge difference between telco colocation and carrier neutral colocation. Processing bits and transporting bits are very, very different businesses; only a company like AT&T (NYSE:T, news, filings) that never saw a vertical it didn’t like would think they fit together well.
But I then realized that it is perhaps more complicated than that. Why? Because cloud computing is the buzzword du jour, and not an actual product or line of products yet. Cloud computing is not an industry, not yet anyway. It is nothing more than an umbrella phrase for an emerging blend of new technologies powering the next generation of infrastructure that will do what we already know how to do but let it scale. So whether telecom companies might one day ‘dominate’ it depends on what it really turns out to be good for. I still think it is silly to expect telecom to start selling cloud services based on stockpiles of servers like a Google or Amazon or Salesforce.com. Where the hard part is storage and processing, the owners of the pipes will not be a factor. Where transport and delivery are the hard part, telecoms have a chance to dominate – but of course no guarantee.
Yes, that means CDNs. The first step in entering the cloud is leveraging it to help you do what you do better, and CDNs can be seen as the way to do that for bandwidth providers. Content delivery networks leverage scalable computing power and sophisticated caching algorithms to help deliver bits faster and more reliably than ever all over the world than carriers can do otherwise . That’s what the cloud is already bringing to telecom. The carriers have a chance to make major inroads there because the tasks being optimized are already ones they are good at. The idea, however, that telecom carriers are going to start building new datacenters and stockpiling servers to sell storage or utility computing or hosting or whatever – that just isn’t going to happen. Telecoms would just rather sell to those guys, because the more applications that are run in the cloud, the more data will need transporting to and from that cloud. It’s less about access to customers and culture and all that, and more about the actual tasks an organization is geared toward providing.
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To say that Telecom companies are going to dominate cloud computing is like saying the owners of the country’s power grid are going to dominate power generation. Telecom is necessary to take advantage of cloud computing, but unless Telecom companies redefine themselves as managed hosting companies, they bring no special skill set to cloud computing.
I agree with the fact that cloud computing is a buzz word to a sense, but the basis of cloud computing is to allow our internet applications to scale on a dynamic global infrastructure. I believe there are two sides of this realm. You have amazon which offers you a scaleable hardware architecture to support your current application in order to subsidize the cost of hardware and upkeep. On the other end you have salesforce and google who offers the architecture and software development tools that surround their specific application. I have been in the online industry for the last 10 years and I believe cloud computing brings all new promises to the online industry. There have been very few in the space, as the likes of Unicorn Media, who offer the same scaleable global infrastructure as other providers but are making way in terms of developing a software toolkit to subside many of the development feats seen today when building new internet applications.