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Emerging Markets: The Cloud Imperative


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What is the cloud opportunity in emerging markets? This presentation provides an overview of key cloud builders, target customer types and hot services in growth markets.

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Emerging Markets: The Cloud Imperative

  1. 1. Emerging Markets: The Cloud ImperativeCamille MendlerPrincipal AnalystInforma Telecoms & Media Webinar July 17, 2012 @cmendler - July 2012 1 © All rights reserved
  2. 2. 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 @cmendler - July 2012 2 © All rights reserved
  3. 3. Emerging markets: The cloud imperative Cloud is about empowerment • Support business agility • Promote global competitiveness • Accelerate development goals It’s not simply about saving moneyCloud stakeholders in emerging markets - particularly in Africa - exhibitmore nuanced thinking about cloud than many peers in developed markets.Lacking much legacy infrastructure, the cloud’s operational model servesa dual purpose: To work around what’s missing, and to leapfrog peers. @cmendler - July 2012 3 © All rights reserved
  4. 4. 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 @cmendler - July 2012 4 © All rights reserved
  5. 5. Many stakeholders are in the cloud game Web Integrators Services from…Telcos ISPs Hardware Software Devices Colos / hosters Governments Cloud vending machine Enterprises By business origin. African example. @cmendler - July 2012 5 © All rights reserved
  6. 6. In emerging markets, telcos hold the best cards Brand recognition Personal Wide area connectivity connectivity Security Datacenters certifications Billing DistributionThe means of consumption and distribution remain in local operators’ hands. @cmendler - July 2012 6 © All rights reserved
  7. 7. That was then… Source: Informa Telecoms & MediaInvestments in 2011 showed clear bias among developed market operators. @cmendler - July 2012 7 © All rights reserved
  8. 8. Now, the picture is shifting Telco cloud service launches by country type (preliminary) 1H11 1H12 High-income Examples: Germany, countries 77% 55% Japan, UAE, US Upper-middle Examples: Brazil, China, income countries 9% 37% Russia, Turkey Lower-middle Examples: Armenia, India, income countries Ukraine, Vietnam 9% 7% Low-income Examples: Kenya, Pakistan, countries 5% Tanzania, Uganda 2% Source: Informa Telecoms & Media Telecom operators are the largest and most active investors in cloud infrastructure across emerging markets. @cmendler - July 2012 8 © All rights reserved
  9. 9. Africa: Motivated to grow • Various SaaS; desktop as a service across subsidiaries • Virtual servers • Claims Africa’s largest • Data center builds telecom cloud infrastructure • SME focus • Also seeks government partnerships • Madagascar cloud telephony with Movirtu • Google social tools • Diverse SaaS offers via SMS • UC, security & storage • Cloud-based M2M • Fiber + datacenter builds • NTT-owned DiData +Internet Solutions extensive cloud offers • Fiber & datacenter builds • SME, corporate, MNC • Cloud telephony • SaaS trials; MS Office365 • Funding for service • Teraco & Neotel datacenter replication in Kenya tenancy; fiber build & beyond Picture: Flickr/kibuyuActivity is concentrated in South Africa and Kenya, but service providers arerolling out their portfolio across all subsidiaries. @cmendler - July 2012 9 © All rights reserved
  10. 10. South America: Hot in 2012Rising investment from in-region operators• Alestra• Telefonica• America Movil• Entel• Oi• TIM BrasilGlobal service providers• BT Global Services• Level 3• Orange Business ServicesIntegrators• IBM Several multi-country service rollouts are now underway after strategic investment in building quality datacenter infrastructure. Picture: Flickr/dubiella @cmendler - July 2012 10 © All rights reserved
  11. 11. Emerging Asia: Diverse and inventive• ‘Other’ is the most interesting Cloud services launched by type, 2012 Othercategory: 12% Mobile device mgmt• Taxi fleet management IaaS 6%• Dentist insurance invoicing 38% Storage, backup &• Cloud-based CCTV restore• Video conferencing for education 6% Business• More focus on mobile cloud apps suite 9%• Integration of M2M and Cloud Unified Security 9% comms 20% Picture: Flickr/Vietcon1 @cmendler - July 2012 11 © All rights reserved
  12. 12. China: Some like it Hohhot $1.8B $1.9B $1.8B The ‘green’ Inner Mongolian city of Hohhot is receiving $8 billion in cloud-related investment – chiefly from telecom operators. Picture: Flickr/Civitas Veritas @cmendler - July 2012 12 © All rights reserved
  13. 13. 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 @cmendler - July 2012 13 © All rights reserved
  14. 14. Key cloud customers in emerging markets 1. The middle-class consumer 2. The small enterprise universe 3. The mini multinational Cloud opportunity exists in all customer segments. But we believe that the customer groups highlighted offer the greatest growth potential. Picture: Flickr/mrjorgen @cmendler - July 2012 14 © All rights reserved
  15. 15. Middle class inhabitants (millions)The middle-class consumer India 160 China 157 Africa 128 • Urbanization Brazil 106 Indonesia 50 Russia 36 • Fast-growing middle class South Africa Tunisia 5 10 • Capture them now 0 50 100 150 200 Middle class % of population India 13% China 12% Africa 13% Brazil 54% Indonesia 21% Russia 25% South Africa 20%Despite notoriously dissonant definitions of Tunisia 46%who is ‘middle class,’ the unquestionable 0% 20% 40% 60%growth of consumer consumption cannot beignored in developing a cloud services portfolio Selected examples, various sourcesin emerging markets. Picture: Flickr/christinyca @cmendler - July 2012 15 © All rights reserved
  16. 16. Appeal to convenience; drive consumptionExamples China Telecom Maxis (Malaysia) Axis (Indonesia)• Cloud Gaming • e-Books • Multimedia storage• HD gaming without console • Filling gap for e-books in • This STC affiliate offers its (import issues) local languages Axis Box service free• Via connected TVs • Using Alcatel-Lucent’s Digital • Accessible from any device, Media Store platform• Using the Ubitus Game supporting ios, Android • 300,000 novels and scientific and Blackberry OS Cloud platform journals • Customers get 2GB of• Smart tv manufacturers • Accessible via any connected Skyworth, KONKA and LG storage free, via device partnership with Drop Box are initial partners 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. @cmendler - July 2012 16 © All rights reserved
  17. 17. The small enterprise universe Developed economy Emerging economyCompany size LARGE MEDIUM SMALL MICRO Employment population Employment population 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. @cmendler - July 2012 17 © All rights reserved
  18. 18. Evolving the SME proposition Bundle add ons Originally Specialist apps communications (eg: vertical) centric Virtual desktop (eg: Citrix) General business apps (eg: GoogleApps, MS Office) Storage / hosting (eg: cloud-based) Unified Communications (eg: presence, messaging) Broadband Now becoming (fixed and mobile) productivity centric Telephony (fixed and mobile) TimeA mobile-centric SME ‘office in a box’ is a great beginning. Vodacom’s Office inthe Cloud is a solid example. But vertical add ons can deliver differentiation. @cmendler - July 2012 18 © All rights reserved
  19. 19. Smart: Focus on SME ‘mass’ verticalsExamples Maxis (Malaysia) Indosat (Indonesia) MTN (South Africa) • Mobile Fleet• Built for SME - Retail • Mobile App Accelerator Management •• Business voice (fixed • Targeting local application South Africa’s 3rd largest and mobile) developers vertical• Point of Sale and ERP • SMEs with <200 workers • Using Nokia Siemens • Real-time reports on• Also option for CCTV surveillance of store via Networks’ cloud-based location, deliveries fiber connectivity telco asset marketplace • Workflow management development platform • Wins brownie points with government 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?). @cmendler - July 2012 19 © All rights reserved
  20. 20. The mini multinationalBrazil exports Russia exports India exports China exportsAsia (ex Japan) 24% W. Europe 49% Asia (ex Japan) 29% Asia (ex Japan) 31%W. Europe 23% CEE 18% W. Europe 20% W. Europe 21%S. America 22% Asia (ex Japan) 14% Middle East 19% N. America 20%N. America 13% N. America 9% N. America 15% Other advanced 10%Middle East 6% Other advanced 5% Africa 6% S. America 5% Source: IMF Direction of Trade Statistics, 2010Emerging markets are doing more business with each other. With economicgrowth, birth of new multinationals from emerging markets – operating on aregional and global level. @cmendler - July 2012 20 © All rights reserved
  21. 21. Treat them well: Rethinking A and B endExamples BT Global Services China Telecom Tata Communications & China ComService• Global, but growing in Latin • Positioned as an emerging America, Middle East markets service provider for • Latin American expansion emerging markets enterprises• Investments include regional datacenters and on-the- • Subsidiaries in Brazil • Filling service gap afforded to ground teams global multinationals and regional • Full suite of communications minis• Strong emphasis on local services planned professional services • Particularly strong in cloud-based • But also cloud services UC and telepresence services• Ongoing expansion of cloud targeting Latin American and • Submarine cable assets aligned to contact center/UC Asian multinationals all key trade routes Regional data center and network POPs are key investments – but so are on-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. @cmendler - July 2012 21 © All rights reserved
  22. 22. Capacity building requires integration Source: SafaricomCloud service providers must build a single cloud infrastructure for multi-stakeholder services. Hybrid, not siloed connectivity will drive success. @cmendler - July 2012 22 © All rights reserved
  23. 23. TakeawaysDon’t ignore the consuming classes• Now is the time to capture rising disposable incomeKnow your demographics• Beware of purely generic solutions – support local languagesand local ‘mass’ verticalsCompete on customer excellence• Local presence and support are lasting differentiators in a U.S.-centric cloud marketPromote agility, not cost savings• Value for money is simply a hygiene factor in the cloud @cmendler - July 2012 23 © All rights reserved
  24. 24. Let’s continue the discussionJoin us at these upcoming cloud eventsFor EnterprisesFor Cloud EnablersFor further information, contact Dominic Offord: @cmendler - July 2012 24 © All rights reserved
  25. 25. Meet some of our regional analystsSouth America Asia PacificMarceli Passoni Ari Lopes Charles Moon Anubhuti Belgaonkar Africa & Middle East Eastern Europe & CIS Sadiq Malik Thecla Mbongue Inna Natalchenko Stephen Wilson Contact us in your language, in your region. @cmendler - July 2012 25 © All rights reserved
  26. 26. Thank you! Camille Mendler Principal Analyst, Informa Telecoms & Media +44 7766 13 15 28 Twitter | Slideshare | @cmendler - July 2012 26© All rights reserved 26