emerging markets: the cloud imperative

www.informatandm.com @cmendler - July 2012 1© All rights reserved

Emerging Markets: The Cloud Imperative

Camille Mendler

Principal Analyst

Informa Telecoms & Media

Webinar

July 17, 2012

http://twitter.com/cmendler


Agenda

• Why is cloud an imperative in emerging markets?

• Who are the leading cloud builders?

• Which customers should be targeted and how?

• Conclusions and recommendations

• Q&A



Emerging markets: The cloud imperative

Cloud is about empowerment

• Support business agility• Promote global competitiveness• Accelerate development goals

It’s not simply about saving money

Cloud stakeholders in emerging markets - particularly in Africa - exhibit more nuanced thinking about cloud than many peers in developed markets. Lacking much legacy infrastructure, the cloud’s operational model serves a dual purpose: To work around what’s missing, and to leapfrog peers.



Agenda





• Q&A



Services from…

Enterprises

Integrators

Colos / hosters

Web

ISPsTelcos

SoftwareHardware

Devices

Governments Cloud vending machine

By business origin. African example.

Many stakeholders are in the cloud game



Personal connectivity

Brand recognition

Wide areaconnectivity

Datacenters

Distribution

Security certifications

Billing

In emerging markets, telcos hold the best cards

The means of consumption and distribution remain in local operators’ hands.



That was then…

Investments in 2011 showed clear bias among developed market operators.

Source: Informa Telecoms & Media



Now, the picture is shifting

Telecom operators are the largest and most active investors in cloud infrastructure across emerging markets.

Telco cloud service launches by country type (preliminary)

1H11 1H12

High-incomecountries

Upper-middle income countries

Lower-middle income countries

Low-income countries

55%

9%

5%

7%

37%

77%

9%

Source: Informa Telecoms & Media

Examples: Germany, Japan, UAE, US

Examples: Brazil, China, Russia, Turkey

Examples: Armenia, India, Ukraine, Vietnam

Examples: Kenya, Pakistan, Tanzania, Uganda2%



Africa: Motivated to grow

Activity is concentrated in South Africa and Kenya, but service providers arerolling out their portfolio across all subsidiaries.

• Claims Africa’s largest telecom cloud infrastructure• SME focus• Also seeks government partnerships

• Various SaaS; desktop as a service across subsidiaries• Virtual servers• Data center builds

• Diverse SaaS offers• UC, security & storage• Cloud-based M2M • Fiber + datacenter builds

• Cloud telephony• SaaS trials; MS Office365• Teraco & Neotel datacenter tenancy; fiber build

• Madagascar cloud telephony with Movirtu• Google social toolsvia SMS

• Funding for servicereplication in Kenya& beyond

• NTT-owned DiData +Internet Solutions extensive cloud offers• Fiber & datacenter builds• SME, corporate, MNC

Picture: Flickr/kibuyu



South America: Hot in 2012

Picture: Flickr/dubiella

Several multi-country service rollouts are now underway after strategic investment in building quality datacenter infrastructure.

Rising investment from in-region operators• Alestra• Telefonica • America Movil• Entel• Oi• TIM Brasil

Global service providers• BT Global Services• Level 3• Orange Business Services

Integrators• IBM



Emerging Asia: Diverse and inventive

Picture: Flickr/Vietcon1

Other12%

Mobile device mgmt

6%

Storage, backup & restore

6%

Business apps suite

9%

Security9%Unified

comms20%

IaaS38%

Cloud services launched by type, 2012• ‘Other’ is the most interesting category:

• Taxi fleet management• Dentist insurance invoicing• Cloud-based CCTV• Video conferencing for education

• More focus on mobile cloud

• Integration of M2M and Cloud



China: Some like it Hohhot

The ‘green’ Inner Mongolian city of Hohhot is receiving $8 billion in cloud-related investment – chiefly from telecom operators.

$1.8B $1.9B $1.8B

Picture: Flickr/Civitas Veritas



Agenda





• Q&A



Key cloud customers in emerging markets

Cloud opportunity exists in all customer segments. But we believe that the customer groups highlighted offer the greatest growth potential.

1. The middle-class consumer

2. The small enterprise universe

3. The mini multinational

Picture: Flickr/mrjorgen



• Urbanization

• Fast-growing middle class

• Capture them now

The middle-class consumer

Picture: Flickr/christinyca

Despite notoriously dissonant definitions of who is ‘middle class,’ the unquestionable growth of consumer consumption cannot be ignored in developing a cloud services portfolio in emerging markets.

5

10

36

50

106

128

157

160

0 50 100 150 200

Tunisia

South Africa

Russia

Indonesia

Brazil

Africa

China

India

Middle class inhabitants (millions)

46%

20%

25%

21%

54%

13%

12%

13%

0% 20% 40% 60%

Tunisia

South Africa

Russia

Indonesia

Brazil

Africa

China

India

Middle class % of population

Selected examples, various sources



Appeal to convenience; drive consumptionExamples

China Telecom

• Cloud Gaming

• HD gaming without console

(import issues)

• Via connected TVs

• Using the Ubitus Game

Cloud platform

• Smart tv manufacturers

Skyworth, KONKA and LG

are initial partners

Maxis (Malaysia)

• e-Books• Filling gap for e-books in

local languages• Using Alcatel-Lucent’s Digital

Media Store platform• 300,000 novels and scientific

journals• Accessible via any connected

device

Axis (Indonesia)

• Multimedia storage• This STC affiliate offers its

Axis Box service free• Accessible from any device,

supporting ios, Android and Blackberry OS

• Customers get 2GB of storage free, via partnership with Drop Box

For telecom operators in particular, it’s critical to keep consumers tied to cloud services which reinforce the need for quality of connectivity (and security) – to secure their core revenue stream.



Employment population Employment population

Developed economy Emerging economy

Co

mp

any

size

LARGE

MEDIUM

SMALL

MICRO

The small enterprise universe

Unique challenges in some emerging markets: Micro enterprises are heavily represented. Also opportunity, as governments look for ways to help SMEs escalate their contribution to economic growth.



Telephony(fixed and mobile)

General business apps(eg: GoogleApps, MS Office)

Broadband (fixed and mobile)

Virtual desktop(eg: Citrix)

Unified Communications(eg: presence, messaging)

Storage / hosting(eg: cloud-based)

Specialist apps(eg: vertical)

Bundleadd ons

Time

Originally communications centric

Now becomingproductivitycentric

A mobile-centric SME ‘office in a box’ is a great beginning. Vodacom’s Office in the Cloud is a solid example. But vertical add ons can deliver differentiation.

Evolving the SME proposition



Smart: Focus on SME ‘mass’ verticalsExamples

Maxis (Malaysia)

• Built for SME - Retail

• Business voice (fixed and mobile)

• Point of Sale and ERP• Also option for CCTV

surveillance of store via fiber connectivity

Indosat (Indonesia)

• Mobile App Accelerator

• Targeting local application developers

• Using Nokia Siemens Networks’ cloud-based telco asset marketplace development platform

• Wins brownie points withgovernment

MTN (South Africa)

• Mobile Fleet Management

•South Africa’s 3rd largest vertical

• SMEs with <200 workers• Real-time reports on

location, deliveries• Workflow management

Business process improvement rather than cost is the key value emphasized for moving to the cloud. SME app supermarkets can cater to different needs – but SMEs value the convenience of a packaged solution (will they hunt?).



The mini multinational

Source: IMF Direction of Trade Statistics, 2010

Brazil exports Asia (ex Japan) 24%W. Europe 23%S. America 22%N. America 13%Middle East 6%

Russia exports W. Europe 49%CEE 18%Asia (ex Japan) 14%N. America 9%Other advanced 5%

India exports Asia (ex Japan) 29%W. Europe 20%Middle East 19%N. America 15%Africa 6%

China exports Asia (ex Japan) 31%W. Europe 21%N. America 20%Other advanced 10% S. America 5%

Emerging markets are doing more business with each other. With economic growth, birth of new multinationals from emerging markets – operating on a regional and global level.



Treat them well: Rethinking A and B endExamples

BT Global Services

• Global, but growing in Latin America, Middle East

• Investments include regional datacenters and on-the-ground teams

• Strong emphasis on local professional services

• Ongoing expansion of cloud contact center/UC

China Telecom & China ComService

• Latin American expansion

• Subsidiaries in Brazil

• Full suite of communications services planned

• But also cloud services targeting Latin American and Asian multinationals

Tata Communications

• Positioned as an emerging markets service provider for emerging markets enterprises

• Filling service gap afforded to global multinationals and regional minis

• Particularly strong in cloud-based UC and telepresence services

• Submarine cable assets aligned to all key trade routes

Regional data center and network POPs are key investments – but so areon-the-ground professional services teams to develop custom solutions. Our view: Cloud-based unified communications and collaboration –incorporating secured enterprise mobility will sell faster than compute.



Capacity building requires integration

Source: Safaricom

Cloud service providers must build a single cloud infrastructure for multi-stakeholder services. Hybrid, not siloed connectivity will drive success.



Takeaways

Don’t ignore the consuming classes• Now is the time to capture rising disposable income

Know your demographics• Beware of purely generic solutions – support local languages and local ‘mass’ verticals

Compete on customer excellence• Local presence and support are lasting differentiators in a U.S.-centric cloud market

Promote agility, not cost savings• Value for money is simply a hygiene factor in the cloud



Let’s continue the discussionJoin us at these upcoming cloud events

For Enterprises

For Cloud Enablers

For further information, contact Dominic Offord: [email protected]


mailto:[email protected]


Meet some of our regional analysts

South America Asia Pacific

Africa & Middle East Eastern Europe & CIS

Stephen WilsonInna Natalchenko

Charles Moon Anubhuti Belgaonkar

Sadiq Malik Thecla Mbongue

Marceli Passoni Ari Lopes

Contact us in your language, in your region.


http://blogs.informatandm.com/author/natalchenkoi/

www.informatandm.com @cmendler - July 2012 26© All rights reserved 26

Thank you!

Camille MendlerPrincipal Analyst, Informa Telecoms & Media

[email protected]+44 7766 13 15 28

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mailto:[email protected]


http://www.slideshare.net/camillem

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