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In my opinion, the Cloud is getting more than its fair share of attention and focus in the IT market and the routes to market. What is new about the Cloud is how and who sells and deploys the solution. There are two large components of the Cloud: network connectivity and IT systems in the data center. Neither one, IT product supplier or Telco networking services provider, can provide a Cloud solution without the other. The Cloud requires both product and service to deliver a solution.

My bet…Telcos will win, the barrier to entry is very high for new competitors in the Telco market. Telcos own connectivity and that infrastructure is often too expensive to replicate or acquire. Therefore, the Telcos are protected FOR NOW. Wireless is here in a large way. This has changed the landscape, but for now, wireless does not have the same acceptance, bandwidth or market share as the traditional wired networks.

I believe another elephant in the room is communications and sales by both IT and Telco to the end user. I’m an end user, I want to implement a huge Cloud deployment. I know what I want from a business perspective, I have infrastructure from HP, or IBM, for example. Do I go to them or do I really like my communications carrier with whom I also have a very solid relationship? Why can’t they find a way to bundle a solution? The competition makes this a buyers’ market – I can play this game, get a better price –at what cost to the solution and the service? Is the old adage true: I get what I pay for?

What about the go to market channel strategy? Both Telco and IT infrastructure are hugely dependent on solution providers (channel) to sell and deliver the solutions. The business model for each group is vastly different. There are only modest barriers to entry for partners selling Telco connectivity, limited technical certifications. The Telco channel model compensates partners with an agent fee (similar to real estate). IT suppliers, for example Dell/EMC, HP, IBM, require their resellers to attain technical and sales certifications. The level of certification requirements increases based on complexity of the solutions, which increases the barriers to entry. Resellers have to pay for training (topic for another time). Resellers are paid a percentage of the margin from the sale. I will be writing additional blogs on these subjects.

AT&T or Verizon can’t build a data center with their own products. Dell/EMC, HP or IBM they don’t own the networks required to deliver the Cloud solution. Here in lies the question, who is going to win the customers trust and business, which one will be the dominate player? This is the question that remains to be seen. This blog is a 10,000 foot view of the changes in the IT market. There is a sea tide of under currents in play in this area.

Let’s discuss: Email Ms. Waxman at jwaxman@neuralytix.com.

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