Home Carrier Theories Meets Harsh Reality Of Competing With Amazon

Carrier Theories Meets Harsh Reality Of Competing With Amazon

Carrier clouds should be killing Amazon. They own the networks. They own the billing relationship with business customers. Yet they’re struggling to make the slightest dent against the Amazon Web Services behemoth, which Morgan Stanley just pegged to impact 3% to 17% of all IT spending in the next few years.

Is there any reason to expect this to change?

More Than Just Dumb Pipes

For years telcos have looked for ways to maximize the value of their networks, getting away from the characterization that they’re merely “dumb pipes.” In theory, cloud computing is an ideal way to do this and plays to the carriers strengths: existing billing relationships with businesses that need cloud computing resources and ownership of the networks so as to ensure quality of service. As Alcatel-Lucent has been telling the world since at least 2011, most cloud providers can’t promise high service-level guarantees because they rely on others’ networks and commodity, failure-prone hardware.

More recently, carriers like AT&T have been talking up the capability to “expose [a carrier’s] network and billing capabilities as APIs, letting business customers seamlessly integrate AT&T’s capabilities into their own internal apps without extra logins.” In order to compete, telecom operators like AT&T have spent $17 billion to build out their cloud technology portfolios, according to IDC, including Verizon’s $1.4 billion acquisition of Terremark in 2011 to give it a lead in cloud computing know-how.

The technology is there. The will is there. What seems to be missing for the carriers is a focus on the right customer. 

Overlooking The Developer

At the most basic level, carriers have proved to be terrible marketeers of cloud services. In large part this revolves around the person to whom the carriers market their services: businesses.

After all, the carriers largely ignore the developer, and that’s a huge mistake in a market that is driven by developers. As much as carrier clouds may make sense for a business with an existing billing relationship with Verizon or another carrier, it’s almost certainly the case that the person actually writing applications for the cloud isn’t privy to that billing relationship. Instead, she’s the developer down the hall who signs up for AWS because she just wants to get work done as conveniently as possible.

AT&T’s Laura Merling gets this, and has been nudging the carrier toward open APIs in a bid to attract developers. It’s a good start, but has it come too late?

The Google In The Room

After all, Amazon isn’t the only company with developer cred. Google, for example, groks developers. Google I/O was one big geek fest, with the opening keynote lasting hours and bursting with developer love.

Nor is Google’s developer outreach merely a matter of marketing. According to one ex-AWS engineer, Google also threatens Amazon because it arguably bests Amazon in compute performance. And while Amazon makes developers happy with consistent price decreases, Google has gone one step further and offered minutely, rather than hourly, rates, which saves developers on downtime. 

Google, then, is a legitimate threat to Amazon. The carriers? Not so much. Not until they stop trying to sell top-down to businesses and instead recognize that the cloud is very much a bottom-up phenomenon, driven by and for developers.

Image courtesy of Shutterstock.

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