If you see a carrier trumpet their decision to resell MSFT Office 365, short the stock.
The telecom doomsday dance.
The next time you see a telecom announcement trumpeting an agreement to resell Office 365, short the stock.
It is more likely than not that every telecom provider will wake up within a year to realize that survival depends on their ability to grow multi-billion dollar revenue streams in services that they do not offer today. The length of time they have to accomplish that will depend on their ability to stop the ice cube on the stove from melting.
Sitting on the largest opportunity of a lifetime, carriers are not getting aggressive enough in cloud. Resting on existing revenue streams, they are becoming good at expense management, but aren’t finding meaningful growth.
For years, telecom have built their national networks, made acquisitions to fortify footprint, and carefully invested in fibre. The adventurous among them have purchased ancient data center assets and small managed services companies in an attempt to differentiate and enhance their relevance with customers.
Telecom are generally stuck in the legacy thinking that their role is to choose vendor technologies, operationalize them, and sell them to the masses.
Despite a staggering advantage as the supplier of bandwidth, the on-ramp to the internet, and millions of billing relationships, carriers are ignoring the strategies that could ensure their survival. Steeped in their past, they continue to follow a cloud strategy path of sameness and apathy, dumping aimless bundles of services on the top of SMBs and enterprise customers with no clear vision for the future.
In a year, telecom executives will laugh at the folly of this cloud playbook - as they look for new jobs.
In the rear view mirror, it will become clear that the writing was on the wall. Google is quietly signing up residents for “fiberhoods” and announcing a triple play in Kansas City. Google is also dishing up free wi-fi in New York City subways under the undefined moniker “Google Offers”. Skype (Microsoft’s great white hope) is dripping telephony performance improvements alongside aggressive calling plans, and is aggregating wi-fi hotspots to offer coverage on a pay-as-you go basis. Facebook is looking at the mass of their user base and is making noises about mobile services and devices to extend their advertising platforms. Sleepy low orbit satellite companies are making plans to come in from the rural markets with easier connectivity choices than exist today in major metros - where install times for broadband are averaging 90 days.
There is precedence for the blindness. In the mobile space, the biggest example (ancient but notable) is Apple’s iPhone, who owned the consumer market for over the top applications overnight. Their carrier partner, AT&T did not make a dollar on the App Marketplace, yet bore the expensive burden of supporting a network that had strained capacity overnight. Non telecom examples include Blackberry, Barnes & Noble, Blockbuster, and many many more.
These companies’ leaders were at the center of melting ice cubes on the grill, and did not realize it until they were charred on the outside, and their companies were gone.
Questions carriers should ask themselves:
Doesn’t everyone already have email?
Can’t people buy Office 365 from Microsoft?
Do SMBs care if it’s Cisco?
What if the entire mobile customer base stampedes to a new technology?
What if SMBs don’t need to buy bandwidth any more?
Does/did buying old data centers give us a competitive advantage?
Can our sales people sell anything besides telecom?
How long ago did we appoint the leader of our cloud services initiative?
After the earnings call with the analysts, am I asking the leadership team how we are going to do any of it?
GOOD NEWS
It does not cost that much money, nor is it that complicated, to pivot from here.
BAD NEWS
It does not cost that much money for new entrants to come into the marketplace and replace telecom in nearly every sense at a fraction of the cost structure.
Hope is not a strategy. Real disruption is on the horizon. Great leaders will embrace the chaos and create new markets for their companies, and will assemble a team of people who have fun doing it. Investors, public and private, will not be forgiving of the rest.
About the Author
Grace F. Schroeder, CEO is a founder of Idea2
I am immersed in conversations surrounding the opportunities that cloud services present to small and medium sized business - and for the service providers who will help drive adoption.
- Senior Director, Channel & Field Marketing Qwest Communications
- Vice President of Product Management at Dantis, a managed hosting concern in Chicago, IL
- Founder at Go Trading, Inc., a successful day trading firm in Los Angeles
- Vice President, Transamerica - first Broker-Dealer distributed Variable Annuity that grew to $400M in annual sales within 18 months.
- Grace holds a B.A. in Psychology from San Francisco State University
.
