Whitepaper - A Consumer Cloud Solution - White Label or Build

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The momentum continues to build in a technology-rich society where consumers are the drivers. Lifestyle standards are changing at an accelerating speed. Global businesses need to keep up with the pace to remain players in their industry. The personal cloud is predicted to replace PCs for the majority of consumer content storage needs. Only 7 percent of digital content was stored in the personal cloud in 2011 and expected to reach 36 percent as early as 2016. The choice to enter the consumer cloud space is to buy or build. A white label consumer cloud offer is an ideal solution for businesses to enter the cloud market with minimal financial risks. It is designed to increase market share opportunities and help with customer retention. If a company buys or builds, the fact remains that harnessing the cloud is a requirement in order to compete in times ahead.

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Whitepaper - A Consumer Cloud Solution - White Label or Build

  1. 1. WHITE A CONSUMER CLOUD SOLUTION LABELorBUILD?
  2. 2. The momentum continues to build in a technology-rich society where consumers are the drivers. Lifestyle standards are changing at an accelerating speed. Global businesses need to keep up with the pace to remain players in their industry. The adoption of the cloud is no longer a choice but a means for survival.
  3. 3. INTRODUCTION As the industry demonstrates on a daily basis, technology is undergoing a major transformation. Over the past few years, technology has made unprecedented strides, forcing companies to reevaluate their business models and become open to new possibilities. Threats are coming, not from traditional competitors, but from new approaches utilizing this technology. The role and structure of IT is changing, the increased need for technology from consumers is exploding, product development cycles along with market response times are shorter and the cloud is no longer a nice idea but it is the super glue holding all of this activity together. The adoption of the cloud is a critical component in these ultra-disruptive times. Global corporate leaders are faced with two key challenges: first, how to rapidly enter the cloud market to capitalize on a time sensitive opportunity. Second, how to minimize the costs and risks associated with building their core business while simultaneously expanding into an unknown market to meet consumer demands. Companies are pressured to look at quick solutions to leverage their business in order to increase the average revenue per user (ARPU), reduce costs and protect their brand. The cloud has become the backbone of technology for both consumers and companies. In today’s market, the ability to access data anytime, anywhere from any device is assumed. Cloud storage is now a commodity and the concepts of share, sync and collaborate are utilized by consumers worldwide. The functionality of the cloud is an integral part of a consumer’s everyday life. Research firm Gartner is warning the industry: service providers slow to adapt to the cloud market are looking at tough times ahead. Only 7 percent of digital content was stored in the personal cloud in 2011 and expected to reach 36 percent as early as 2016. The personal cloud is predicted to replace PCs for the majority of consumer content storage needs. Gartner predicts the end user will spend $131 billion in 2013 on the public cloud and that number will rise to $180 billion in the next two years. If companies are not in a search mode for a cloud content management component that can be integrated into their business model, they have already fallen far behind. Now is the time for global companies to find the right consumer cloud solution. The crucial first step is making the decision to buy versus build. Companies will need to approach the cloud market carefully if they choose to use a third party provider. Some cloud providers are throwing their products and services into the market in a “me too” fashion with hope of getting a foot in the industry door. It will be important for companies to conduct their due diligence to ensure they choose a cloud solution with a proven product that complements their brand, business standards and financial model. If a company buys or builds, the fact remains that harnessing the cloud is a requirement in order to play in times ahead. Only 7 percent of digital content was stored in the personal cloud in 2011 and expected to reach 36 percent as early as 2016. 01
  4. 4. 01 MOBILE DEVICES// Transforming Mobile Industries 02 MOBILE DATA USAGE// An Explosion and Creating New Norms 03 THE CLOUD// No Longer a Business Choice 04 CONSUMERS// Global Trends and Growth 05 CONSUMER RETENTION// Increases “Stickiness” 06 WHITE LABEL CONSUMER CLOUD SERVICES// Why It Makes Business Sense TABLE OF CONTENTS
  5. 5. MOBILE DEVICES//Transforming Global Industries The infiltration of mobile devices into the modern world has transformed global societies. The power of mobility has caused the consumer to view devices as essential daily items that contribute to the quality of life. A household with multiple devices is now commonplace and the owners spread along the age spectrum. Connected devices such as smartphones, tablets, game consoles and streaming media set top boxes have easily worked their way into the global household. A large percentage of consumers are now at a point where they will not hesitate to make a purchase to get the latest and greatest gadget to stay on top of the trends. From January 2013 to April 2013 the average number of devices per household in the United States increased from 5.3 to 5.7.1 The size of the household, lifestyle and income levels can raise these averages well into the teens. Demographics of the device-driven household also expanded with lifestyle changes and advances in technology. Young children and seniors are now appreciable players in the technology consumer base, making the mobile device market more widespread and commoditized. With commoditization comes a shift in the industry, a change to consumer demands and purchase patterns as well as cultural lifestyle changes. Consumers have fully embraced a technology-rich environment and have become an important voice of new device developments. Consumer demands point to sleeker, lighter and more transportable device options. People want to be connected all the time and with today’s on-the-go lifestyle society is mobile in every sense of the word. This conversion into a mobile lifestyle has had great influence on consumer purchase behaviors and continues to impact the stability of various traditional markets. For example, in 2013, PC shipments declined worldwide while tablet and mobile phone device shipments are on the rise and projected to grow.2 Tablet shipments are expected to surpass desktop PCs and notebooks in a short time since their introduction. Projections show the number of tablet users will reach 905 million worldwide by 2017, yielding a dramatic climb from only 15 million users in 2010.3 The once dominant PC market will be faced with future challenges due to the accelerated speed of consumer demand in the tablet and smartphone market. 1 NPD Group, Mar 18, 2013 2 Gartner, Press Release Apr 4, 2013 3 IDC Press Release, Mar 26, 2013 From January 2013 to April 2013 the average number of household devices in the United States increased from 5.3 to 5.7. 03
  6. 6. 4 IDC, Mobile Channels, Apr 5, 2013 5 Gartner, Forbes, Oct. 23, 2012 6 Cisco: The Guardian, Feb 7, 2013 Looking forward, predictions show the worldwide smart connected device space will continue to surge, with shipments surpassing 2.2 billion units and revenues reaching $814.3 billion in 2017.4 With the saturation of mobility among consumers, the most popular connected device to access the internet is projected to change from the PC to the tablet and mobile smart phone.5 Globally, the projected number of connected mobile devices as a whole will exceed the number of humans on earth with more than 7 billion units in circulation toward the end of 2013.6 Lower prices on tablets and smartphones have made buying mobile devices a more viable option for many households, creating an explosion in the use of connected devices worldwide. It is clear the technology revolution has created a mobile revolution. The world has turned mobile and agility is vital for organizations to stay competitive. The world has turned mobile and agility is vital for corporations to stay competitive. WORLDWIDE DEVICE SHIPMENTS BY SEGMENTS (thousands of units) Source: Gartner, June 2013 PC (Desk-Based & Notebook) 341,273 305,178 289,239 9,787 20,301 39,824 120,203 201,825 276,178 1,746,177 2012 2013 2014 1,821,193 1,901,188 Mobile Phone Ultramobile Tablet 04
  7. 7. MOBILE DATA USAGE//An Explosion with New Norms The popularity in mobile devices has created an explosion for the need of high speed data via online channels. Figures representing current internet usage appropriately puts global online activity levels into context: 204 million Emails Sent 100 hours YouTube Videos 1.3 million Video Views 2+ million Google Searches 6 million Facebook Views 277K Profile Logins 20 million Photo Views 3K Flickr Uploads 100+ New LinkedIn Accounts 100 K New Tweets 320+ New Accounts 4,860 Comments 61,141 hours Music Played 47K Apps Downloaded AN INTERNET MINUTE AND THE CLOUD 639,800 GB IP DATA TRANSFERRED WORLDWIDE almost a quarter of all mobile data users are expected to use 2 gigabytes of data per day. Two gigabytes is roughly equal to 10 hours of video, 15 hours of audio, 15 app downloads or five video calls. By 2017... Various Sources Used: Intel,Twitter,Dazinfo,Cisco 05
  8. 8. penetration and data consumption levels up.9 As penetration levels rise, online access is considered to be a commodity-based service to a large portion of the population and that concept is spreading across most nations. The viral nature brought to the market by mobile and internet capabilities present an enticing opportunity. Many industries are looking to expand their scope of products and services to tap into the demand while it is still open to diverse possibilities. As the rest of the world joins the mobility culture, the connected population is “on” all the time. Constant access to the internet has given consumers a reason to leave one device at one location, use another device from a different location and pick up exactly where they left off. Mobile and broadband markets have changed human lifestyle so quickly, anytime, anywhere with any device is the standard. As a result of this standard, a seamless experience with a single sign on has also become the new expectation. Consumers are weaving more and more mobile technology into most aspects of their personal, business and educational lives. Therefore, they are always in search of products and services that will help improve their mobile, online experience to make their lives better. 7 UN Millennium Development Goals Report 2013 8 Cisco, Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017, Feb 6, 2013 9 ICT Facts and Figures 2013 In 2013, there are an estimated 2.7 billion internet users around the globe, with Europe taking the lead with the highest penetration rate followed by the Americas.7 With mobile tablets and smartphones predicted to replace PCs as the primary vehicle to access the internet, data usage, data consumption and penetration levels are projected to rise substantially more in the next few years than in previous years. Total figures will be impacted in the very near term, partly due to the massive growth in device usage that is anticipated in Asia, the Pacific and Africa.8 As the global economy improves, connected device purchases will become a viable financial option. In current times, the popularity of smartphones has boosted internet usage figures to double annually in developed markets. With almost 40 percent of the world online and the progressive use of mobile devices, broadband prices have generally become more affordable to the user. Fixed broadband prices have drastically decreased by approximately 82 percent over the past 4 years, pushing internet (per 100 inhabitants) 16% AFRICA % 32 % 38 % 52 % 61 % 75 INTERNET PENETRATION BY REGION IN 2013 ASIA ARAB STATES CIS AMERICAS EUROPE Source: ITU World Telecommunication / ICT Indicator Database Internet Penetration Levels Increase as Broadband Prices Decrease 164.6 115.1 20 5 3 2.5 2.0 1.7 1.7 1.7 6 10 27 59.7 41.8 28.5 21.5 85.1 59.4 40.3 30.1 2008 2009 2010 2011 2012 Developing Countries Worldwide Developed Countries KEY Penetration Prices 06
  9. 9. 10 Nasuni, The State of Cloud Storage in 2013 11 Gartner, IIFL, Jul 29, 2013 The vital link sustaining the global movement within the technology and mobile revolution is the cloud. Today, most consumers do not even realize they use the cloud when accessing mainstream channels such as email, YouTube, online banking or Facebook. In years ahead, awareness of the cloud and its value will be much more prominent. The public cloud is the nucleus that supports technology consumerization. Technology-driven companies can no longer afford to develop business models without a cloud component if they intend to remain relevant in the market. Companies without the cloud as a part of their overall technology strategy are taking great risks. Cloud computing in current times has become equal to what software was in the 80s. Initially, cloud computing was primarily designed and used for programming needs and application development. It quickly evolved into various subsets and many more subspecialties such as: IaaS (Infrastructure as a Service), PaaS (Platform as a Service) and SaaS (Software as a Service) to name the higher levels. The cloud as it relates to the consumer is traditionally used to access, store, stream and share data. Present figures suggest there is an estimated 1 exabyte, equal to an approximate 1 billion gigabyte, of stored data in the public cloud as a whole; this number is expected to climb exponentially in a very short timeframe.10 Corporate spending in the entire cloud market has grown at an astonishing pace and is forecasted to reach $131 billion worldwide in 2013. That number is projected to quickly climb to $210 billion by 2016 with North America as the primary growth region.11 The emergence of technology, the evolving consumer culture and the adoption of the cloud are playing big roles in predicting the future health of global business environments. The cloud is disrupting the market, just as the THE CLOUD//No Longer a Business Choice Technology-driven companies can no longer afford to develop business models without a cloud component if they intend to remain relevant in their market Public Cloud Services Market and Annual Growth Rate, 2010-2016 77 $inBillions 93 110 131 155 181 210 Source: ITU World Telecommunication / ICT Indicator Database 2010 2011 2012 2013 2014 20162015 07
  10. 10. internet rocked “brick and mortar” businesses in the last decade. The cloud is transforming consumer buying habits and stealing competitor’s business. If companies do not respond by including cloud-based services into their product portfolio, it may result in a drastic market share upset. Although market share shift within an industry is common, the difference with today’s technology and the cloud industry is the speed with which it is happening. This is clearly seen with tablet and mobile phone shipments versus PC shipments this year. Companies may want to act quickly to ensure they stay ahead of growing cloud trends. Some elbow room is necessary to give companies time to build a defensive barrier around their customers by providing services that are hard to replicate. Head-to-Head Competition with Corporations, Acquisitions & Mergers: Emerging Markets are Dominating Although market share shift within an industry is common, the difference with today's technology and the cloud industry is the speed with which it is happening. CONSUMER DEMAND FLEXIBILITY EMERGING TRADITIONAL> EMERGING MARKETS INTEGRATION OF TECHNOLOGY ADVANCES TRADITIONAL 08
  11. 11. 12 Intel, SC & Tech Mar 20, 2013 13 Cisco, Broadband DSL Feb 6, 2013 14 Cisco. Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017 15 Gartner, Forecast, Consumer Digital Storage Needs, Mar 16, 2012 Source: Gartner, 2013 The rate of change in the next few years is expected to be equal to what our society has seen in the last decade of technology developments. The increase of mobile and cloud usage, spread of broadband coverage and advanced technology will create unprecedented benchmarks. Although current statistics of global technology may sound impressive, it is no match for what lies ahead. The number of global networked devices is expected to double from more than 7 billion in 2013 to 14 billion by 2015.12 Data traffic is projected to increase from 1.6 exabytes per month in 2013 to 11.2 exabytes per month by 2017.13 Video will claim its position as the high growth market leader in times ahead. In 2013, video usage produced approximately 0.7 exabytes per month. An astronomical increase is expected in the video market in just a few years. Video usage projections climb to 7.4 exabytes per month in 2016 and will account for 66 percent of all global traffic.14 Despite economic challenges, emerging nations will deliver a strong contribution to growth while developed nations continue to further penetrate into the booming market. As the population transitions to a post PC-era, consumers will become more reliant on multiple connected devices equipped with cameras to fulfill the majority of their needs. Technology advancements of the future such as improved video capabilities and 3D camera images will increase file sizes leading to a greater need for storage. The speed of technology advancements in photo and video will outpace compression technology, impacting storage requirements as well. Worldwide consumer storage needs will rise to an expected total of 4.1 zettabytes by 2016.15 CONSUMERS//Global Trends and Growth Source: Cisco Global Cloud Index The Explosion of Global Digital Content Creation Storage Needs Will Increase 2011 0 5 10 15 20 25 30 Exabytes 2012 2013 2014 2015 2016 AN AVERAGE HOUSEHOLD IN 2016: Digital Storage Needs By Content MOVIES & VIDEOS 51% PHOTOS 35% APPS 11% DOCS 2% MUSIC 1% 09
  12. 12. 16 IDC, Copperegg Sept 11, 2012 The foundational element to support upcoming mobile growth is the cloud. The number of cloud subscriptions will climb quickly with a projected 1.3 billion subscribers by 2017.16 To store, share, sync, stream and collaborate will be a common routine for most global populations. Consumers will look to the personal cloud as a means to bring the latest technology advancements to their lives. The rise of consumer usage and dependency of mobile devices will produce a large spike in data creation and consumption pushing storage needs to new norms. Source: HIS iSuppli Research, October 2012 World Forecaster Personal Cloud Subscriptions (in millions) 2012 0 200 400 600 800 1000 1200 1400 Subscriptions 2013 2014 2015 2016 2017 10
  13. 13. “STICKINESS” POSSIBLE INCREMENTAL REVENUE (per household) $80 3 months $240x = (per household) $80 6 months $480x = (per household) $80 $960 12 months 1000 consumers $960x x = $960,000= PERSONALEDUCATION BUSINESS Smartphone Video Chat SmartTVs Video Streaming 3D Photos & Videos Wearables Mobile Video Consumer Needs Grow with Upcoming Technology Advancements With storage subscriptions on the rise and the personal cloud viewed as a commodity service in the market, providers are coming up with new strategies to increase paid and unpaid subscriptions to capture a piece of that market. Cloud storage wars routinely take place between competitors in an effort to attract new customers. Many hardware device companies also want to take part in the storage game by offering free cloud storage as a bundled promotion with the purchase of a new device. A cloud storage offering serves as a solid base to keep consumers satisfied, with the added value of retention. Although a free cloud storage delivers indirect revenue, the strategy behind the offer is to increase the “stickiness” factor to generate direct revenue. Savvy companies have come to realize that once a consumer uploads a large portion of their photos, videos and files into the personal cloud it can strengthen consumer loyalty and lead to a paid conversion path. A cloud offering is an opportunity for companies to retain revenue for core services that might be lost if a customer chooses to move to another provider for cloud services. The exact scale of retained revenue would depend on corporate-specific information such as business model objectives and the type of service the company chooses to offer. CONSUMER RETENTION//Increases “Stickiness” A cloud offering is a great opportunity for companies to maintain revenue for core services as it also serves as a means to introduce new products. 11
  14. 14. Further penetrating a brand in a competitive cloud marketplace can convert into increased consumer retention and an additional revenue source. A white label in general terms is a product or service where a company purchases a fully supported product from another source, then applies its own brand and identity to it. The company, in turn, sells the product as its own to give the purchaser the impression the product was created by their brand. A reputable white label cloud provider can offer companies a near turn-key solution to quickly respond to consumer needs and gain a competitive advantage in this fast-paced industry. It delivers the benefit of retaining control over the appearance, policies and support of their product line while gaining access to a market-proven software and infrastructure. A white label cloud offering allows companies to: • Rapidly increase products offered to their customers • Reduce churn and increase the “stickiness” factor • Increase Average Revenue Per User (ARPU) • Decrease research and development spending • Accelerate deployment and reduce costs to train, test and release a new product offering • Add a new revenue source and extend market share into a growing global market • Minimize risk in an ever-changing industry Consumer and Brand Benefits A company’s brand can be its greatest asset and holds significant value. Further penetrating a brand in a competitive cloud marketplace can convert into increased consumer retention and an additional revenue source. With the trends of advanced technology increasing in our everyday lives and cloud usage on the rise, a brand presence in the industry is essential. Companies need to maintain a connection with their customer base in order to strengthen loyalty, gain trust, protect and ultimately grow market share. In today’s connected environment, brands have a greater opportunity to form direct relationships with consumers with the use of smartphones and tablets. This increases the need for companies to keep their brand in the forefront of their consumer base by offering a wide array of products and services. By doing this, companies can reap the benefits of increasing the “stickiness” factor and strengthen consumer loyalty. A new product offering in a booming cloud market can solidify a company’s commitment to customer satisfaction by responding to a service that is in high demand. A Turnkey Cloud Solution A primary challenge for many companies can be keeping up with quickly emerging consumer technology advancements and staying on top of the trends. Many companies may find they do not have enough time or resources to effectively WHITELABEL CONSUMER CLOUD SERVICES// Why It Makes Good Business Sense 12
  15. 15. build a quality cloud service offering to satisfy the needs of their consumers, while simultaneously maintaining and building other parts of their core business. Conversely, organizations that want to enter the consumer cloud market may invest too much upfront time, over-allocate valuable resources and overspend in building an infrastructure that may outweigh the benefits of the product. In a constantly evolving market, a cloud offering which is not implemented strategically can produce more negative than positive financial outcomes. Start-Up A white label cloud offering shifts the weight of expensive start-up costs from the company to the third party provider. Foundational elements such as infrastructure, software and consumer interface are pre-developed, tested, refined and already in use. This immediately gives companies the upper hand by transitioning what would be a variable cost for start-up into a fixed cost, allowing for a simplified financial structure that can be easily integrated into their business model. Product Development and Launch An experienced white label provider should be able to give a company invaluable insight of the cloud consumer, based on their direct experience in the market. Companies can easily customize a cloud service offering that fits into their own marketing plan and business model by using the research and input from a credible source specializing in the cloud business. This can greatly reduce the trial and error factor that comes with development of a new product and aid in generating a successful launch. An effective white label provider will act as a partner with a company to ensure business goals are met and consistently achieved. Maintaining and Scaling The fast-paced environment in technology and the cloud industry requires full time, dedicated resources to ensure the latest trends are incorporated into the product to keep the service competitive and valuable. The white label provider assumes the role of the product development specialist, taking the burden of research and planning away from the company. It allows companies to be proactive and also react quickly to consumer demands. Companies interested in entering the cloud business have a very short window of opportunity to become players in the industry as well as remain relevant in the eyes of their consumers. The continuous speed of consumer demand heightens the attractiveness of a white label due to its short turnaround times for implementation, decreased financial risk and prompt execution attributes. Selecting a third party provider with experience in the consumer cloud sector can be the solution for global companies to stay on top. In a constantly evolving market, a cloud offering which is not implemented strategically can produce more negative than positive financial outcomes. 13
  16. 16. Selecting a third-party provider with experience in the consumer cloud sector can be the solution for global companies to stay on top. Reduces Resource Requirements Immediate Access to Consumer Cloud Market No Product Development (start-up or maintenance) OVERALL VALUE Portfolio of Products Customer Satisfaction “Stickiness” Revenue Potential Market Share TURNKEY WHITE LABEL VALUE White Label Provider CorporationsPARTNERSHIP CONSUMER CORPORATION Quick Implementation Reduced Financial Risk 14
  17. 17. CX, Inc. is a white label consumer cloud partner focused on empowering companies to stay competitive. The CX mission is to consistently improve its white label product in order to help partners gain market share and strengthen the relationship they have with their member base. The CX business model is unique in the cloud consumer industry. Its focus is to stay innovative and on top of global technology trends in order to develop cutting-edge cloud product enhancements that will be well received by consumers. A key component of the model is the way with which CX uses its established base of global users as a “test market” to evaluate products and services before they are passed on to white label partners. The CX consumer cloud white label offering is designed to allow companies the ability to quickly launch and market a competitive cloud product. Infrastructure, software applications and customer service fundamentals are consistently tested, enhanced and refined. Core elements include hosting, storage, website, mobile device software, desktop sync applications, technical operations, support and software maintenance. ABOUT CX// Visit www.cx.com for more information. 15

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