A Cloud (and Then Some) for Every Service Provider

November 11, 2011 - by dangeiger1

It is generally recognized that service providers worldwide spend approximately $300 billion per year in infrastructure and services to support the over $1 trillion dollars in revenue that they garner from their consumer, enterprise, and government customers. It is our belief that, ultimately, cloud technologies and practices will have significant impact on the majority of service provider technology purchases and deployments.

As a leading provider of cloud infrastructure and services to service providers worldwide, Joyent is keenly aware of the service provide cloud adoption momentum that is underway. In 2011 we have seen a steep ramp in our number of operator cloud deployments and the industry has seen multiple service providerpurchases of cloud providers outright (e.g., Verizon’s purchase of Terramark and CenturyLink’s purchase of Savvis). One analyst that we recently spoke with said that they’d completed a survey that showed over 90% of service providers either planning to deploy or having already deployed cloud offerings for their customers!

We are seeing 4 types of cloud deployments occurring within service providers: Public clouds, operator application clouds, machine-to-machine scale clouds, and private clouds for new enterprise applications (for internal service provider purposes).

Public clouds are a natural extension of providers’ existing service portfolios. We think that incumbent service providers should become big winners in the cloud arena by extending their networks and pre-existing business relationships with customers in their regions. Clouds will provide an area in which operators can align themselves in more ways with their customers, fostering customer loyalty, building another stream of service revenue, and gaining more return from existing assets.

Operator application clouds are another trend in which service providers are beginning to invest. In this scenario, operators are using clouds as platforms for new application innovation and monetization of mobile and web applications and services. Over the past 5-8 years, it has become apparent that service providers have fallen behind their Internet competitors in their ability to innovate with newer programming and business models. For instance, service providers have not found a competitive way to encourage development and monetization of new mobile applications, even though these applications are running over their networks. With operator application clouds, providers are building hybrid networks on which telecom and outside developers may collaborate, create, deliver, and monetize new applications with faster, lighter weight, web-oriented languages and developer models. The hope is that these more flexible and open clouds can encourage innovation and deliver capabilities like mobile app stores.

Machine-to-machine scale clouds act as the foundation for the burgeoning area of M2M transactions but also can process any number of end point-to-end point transactions. These may be device-to-device, sensor to a more centralized data architecture, or even the facilitation of ecommerce transactions. Once again, service provider networks provide a ready system for receiving, processing, and forwarding interactions amongst a variety of sensors, devices, end points, and systems.

Private clouds for new enterprise applications are within the service provider’s own, internal operations. Most new applications incorporate web application models. Private clouds are the logical platform for developing and running these apps for service provider internal operations. In this use case, service providers are just like any other enterprise that is deploying a private cloud for internal consumption—the main difference is that service provider private clouds could be amongst the larger private clouds because service providers are amongst the largest enterprises and consumers of IT resources in the world. Note, although this blog post focuses solely on service provider use cases, this private cloud example is certainly applicable to most any enterprise looking to deploy a private cloud.

Cloud is just beginning to find its way into the service provider mainstream, and these four use cases are only a few of the much more diverse set of uses that we should be seeing in the near future. We’ll make every effort to communicate our findings in the marketplace with you.

Photo by Karen Ka Ying Wong.

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