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Carrier Cloud Opportunity - TM Forum Management World Dublin 2011

Cloudscaling Co-Founder and CTO Randy Bias shows the world's largest telcos that carriers must embrace web-scale cloud to be successful in the apps that will drive mobile, web and emerging markets. Legacy "clouds" are essentially virtualized and automated IT, and they do not offer the cost performance or business agility these hyper-growth segments demand.

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Carrier Cloud Opportunity
           Breaking the rules; how KT did it
Randy Bias                            @randybias
May 25th, 2011                        @cloudscaling
TMForum - Dublin
Step 1: Vision of Cloud
Opportunity
  - Randy Bias, Cloudscaling

Step 2: How KT Did It
  - Charles Huh, KT
Why don’t Carrier
Clouds look like AWS?
Carriers building for the
 past ... not the future
Carriers today are
building ‘Legacy Clouds’
            ...
aka ‘Enterprise Clouds’
What’s the flaw with
Legacy (Enterprise)
     Clouds?
There are two flaws,
    actually ...
Flaw #1

Enterprise computing is
 not cloud computing
           ...
  Past, not the future
Flaw #2

  Limited Total
Addressable Market
        ...
 Missed Revenue
  Opportunity?
Flaw #1
“Legacy” IaaS Clouds?



             ?
            Private
Internal               External

            Public
“Legacy” IaaS Clouds?

           Enterprise
           Computing
           Techniques


            Private
Internal                External

             Public
Enterprise Computing (Legacy)
Cloud Computing (Web-scale)
Cloud Computing’s Pioneers
IT - Disruption & Evolution




       Mainframe            Enterprise            Cloud
       Computing            Computing           Computing

       "Big Iron"          "Client-Server"       "Web"

1960                1980                 2000               2020
IT - Disruption & Evolution




       Mainframe            Enterprise            Cloud
       Computing            Computing           Computing

       "Big Iron"          "Client-Server"       "Web"

1960                1980                 2000               2020

             Disruption
IT - Disruption & Evolution




       Mainframe            Enterprise            Cloud
       Computing            Computing           Computing

       "Big Iron"          "Client-Server"       "Web"

1960                1980                 2000               2020

             Disruption             Disruption
IT - Disruption & Evolution




       Mainframe            Enterprise            Cloud
       Computing            Computing           Computing

       "Big Iron"          "Client-Server"       "Web"

1960                1980                 2000               2020

             Disruption             Disruption        Disruption
IT - Evolution of Computing Models
   SLA


  Scaling


 Hardware


 HA Type


 Software


Consumption



               Mainframe   Enterprise   Cloud
IT - Evolution of Computing Models
   SLA          99.999


  Scaling                   Vertical


 Hardware      Custom


 HA Type                    Hardware


 Software     Centralized


Consumption   Centralized
               Service


               Mainframe               Enterprise   Cloud
IT - Evolution of Computing Models
   SLA          99.999                   99.9


  Scaling                   Vertical                Horizontal


 Hardware      Custom                  Enterprise


 HA Type                    Hardware                Software


 Software     Centralized                  Decentralized


Consumption   Centralized               Shared
               Service                  Service


               Mainframe               Enterprise                Cloud
IT - Evolution of Computing Models
   SLA          99.999                   99.9                    Always On


  Scaling                   Vertical                Horizontal


 Hardware      Custom                  Enterprise                Commodity


 HA Type                    Hardware                Software


 Software     Centralized                  Decentralized               Distributed


Consumption   Centralized               Shared                   Self-service
               Service                  Service


               Mainframe               Enterprise                 Cloud
Flaw #2
Total Addressable Market: Legacy
                                                 Revenue
   App                                          Opportunity
Developers
                                                    $$$
                            Long Tail of
                            Customers
  SMB



              In-country
              Enterprises

Enterprise

        In-country                         Global
Total Addressable Market: AWS
                                                 Revenue
   App                                          Opportunity
Developers
                                                $$$$$
                            Long Tail of
                            Customers
  SMB



              In-country
              Enterprises

Enterprise

        In-country                         Global
Total Addressable Market: Carriers
                                                 Revenue
   App                                          Opportunity
Developers
                                                    $$$$
                            Long Tail of
                            Customers
  SMB



              In-country
              Enterprises

Enterprise

        In-country                         Global
Why can’t carriers
  maximize TAM and
revenue opportunities?
Legacy “Enterprise”
  Clouds are too
    expensive
Market Pricing Sensitivity
      App
                                                       $
   Developers


                               Long Tail of
                               Customers
      SMB



                 In-country
                 Enterprises

    Enterprise

$$$$$ In-country                              Global
Emerging markets won’t
 accept Legacy Cloud
        prices
Web-scale
 Clouds
You need a Web-scale
Cloud alongside your
    Legacy Cloud
Web-scale vs. Legacy Focus




                  vs.




Greenfield Apps            Legacy Apps
Enterprises use Web-scale Clouds for
          Greenfield Apps
Estimated IaaS Growth Rates
                Web-scale vs. Legacy Cloud

                    88%
90%




68%



45%



23%
                                       20%
 0%


      Web-scale
      Legacy

Source: Cloudscaling market analysis
A Bookseller Rank Top 10 IT services in
               2016???
    1 IBM                                                    $37,347
    2 HP                                                     $34,678
    3 Fujitsu                                                $26,935
    4 CSC                                                    $16,281
    5 Accenture                                              $15,555
    6 Capgemini                                              $11,255
    7 Hitachi                                                $11,050
    8 Ericsson                                               $11,031
    9 AWS                                                    $10,465
   10 NTT Data Corporation                                   $10,425
Source: servicestop100.org - 2010 top 100 IT services businesses by service revenue
Comparing
 Clouds
Capital Expense (Initial)
                    Web-scale vs. Legacy Cloud
                        $4,000


Cost per Sellable                                      $3,216
‘VMU’                   $3,000




(m1.small, 1.7GB        $2,000

RAM, 1 vCore)
                         $1,000


           Web-scale                     $382
           Legacy            $0




    Source: Cloudscaling confidential financial models for IaaS clouds
Operational Expense (Labor)
             Web-scale (1500:1) vs. Legacy (300:1)

                            Servers : IT Headcount
                                                                   $150M


                                                                   $113M


                                                                   $75M


                                                                   $38M


                                                                   $0M
Year 1       Year 2         Year 3          Year 4            Year 5
                       Web-scale                     Legacy

     Source: Cloudscaling estimates of VM:admin based on known IaaS deployments
Legacy 5-yr TCO is 3-5x
more than Web-scale ...
... doesn’t provide 3-5x
value for greenfield apps
Cloud
Futures
Mobile, web, cloud-based apps exploding




  Sources: Asymco.com, Chetan Sharma, Morgan Stanley
Web, mobile, cloud-
based apps won’t be
deployed on Legacy
      Clouds
Carriers need to build
Legacy *and* Web-scale
Carrier Cloud Opportunity - TM Forum Management World Dublin 2011
+
+

Focus first on Greenfield
+

Focus first on Greenfield
  Pricing 20% < AWS
+

Focus first on Greenfield
  Pricing 20% < AWS
     High Margins
+

Focus first on Greenfield
  Pricing 20% < AWS
     High Margins
  Higher Performance
+

Focus first on Greenfield
  Pricing 20% < AWS
     High Margins
  Higher Performance
 < 9 months to market

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