The document discusses the challenges faced by carriers in building cloud services, emphasizing that their legacy clouds resemble enterprise computing rather than adopting web-scale models. It identifies two major flaws in legacy cloud approaches: the incompatibility with modern cloud computing and a limited total addressable market, which restricts revenue opportunities. The author argues for a dual strategy where carriers must develop both legacy and web-scale clouds, focusing initially on affordable, high-performance solutions for greenfield applications.

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

2. Step 1: Vision of Cloud
Opportunity
- Randy Bias, Cloudscaling
Step 2: How KT Did It
- Charles Huh, KT

3. Why don’t Carrier
Clouds look like AWS?

4. Carriers building for the
past ... not the future

5. Carriers today are
building ‘Legacy Clouds’
...
aka ‘Enterprise Clouds’

6. What’s the flaw with
Legacy (Enterprise)
Clouds?

7. There are two flaws,
actually ...

8. Flaw #1
Enterprise computing is
not cloud computing
...
Past, not the future

9. Flaw #2
Limited Total
Addressable Market
...
Missed Revenue
Opportunity?

10. Flaw #1

11. “Legacy” IaaS Clouds?
?
Private
Internal External
Public

12. “Legacy” IaaS Clouds?
Enterprise
Computing
Techniques
Private
Internal External
Public

13. Enterprise Computing (Legacy)

14. Cloud Computing (Web-scale)

15. Cloud Computing’s Pioneers

16. IT - Disruption & Evolution
Mainframe Enterprise Cloud
Computing Computing Computing
"Big Iron" "Client-Server" "Web"
1960 1980 2000 2020

17. IT - Disruption & Evolution
Mainframe Enterprise Cloud
Computing Computing Computing
"Big Iron" "Client-Server" "Web"
1960 1980 2000 2020
Disruption

18. IT - Disruption & Evolution
Mainframe Enterprise Cloud
Computing Computing Computing
"Big Iron" "Client-Server" "Web"
1960 1980 2000 2020
Disruption Disruption

19. IT - Disruption & Evolution
Mainframe Enterprise Cloud
Computing Computing Computing
"Big Iron" "Client-Server" "Web"
1960 1980 2000 2020
Disruption Disruption Disruption

20. IT - Evolution of Computing Models
SLA
Scaling
Hardware
HA Type
Software
Consumption
Mainframe Enterprise Cloud

21. IT - Evolution of Computing Models
SLA 99.999
Scaling Vertical
Hardware Custom
HA Type Hardware
Software Centralized
Consumption Centralized
Service
Mainframe Enterprise Cloud

22. 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

23. 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

24. Flaw #2

25. Total Addressable Market: Legacy
Revenue
App Opportunity
Developers
$$$
Long Tail of
Customers
SMB
In-country
Enterprises
Enterprise
In-country Global

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

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

28. Why can’t carriers
maximize TAM and
revenue opportunities?

29. Legacy “Enterprise”
Clouds are too
expensive

30. Market Pricing Sensitivity
App
$
Developers
Long Tail of
Customers
SMB
In-country
Enterprises
Enterprise
$$$$$ In-country Global

31. Emerging markets won’t
accept Legacy Cloud
prices

32. Web-scale
Clouds

33. You need a Web-scale
Cloud alongside your
Legacy Cloud

34. Web-scale vs. Legacy Focus
vs.
Greenfield Apps Legacy Apps

35. Enterprises use Web-scale Clouds for
Greenfield Apps

36. Estimated IaaS Growth Rates
Web-scale vs. Legacy Cloud
88%
90%
68%
45%
23%
20%
0%
Web-scale
Legacy
Source: Cloudscaling market analysis

37. 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

38. Comparing
Clouds

39. 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

40. 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

41. Legacy 5-yr TCO is 3-5x
more than Web-scale ...

42. ... doesn’t provide 3-5x
value for greenfield apps

43. Cloud
Futures

44. Mobile, web, cloud-based apps exploding
Sources: Asymco.com, Chetan Sharma, Morgan Stanley

45. Web, mobile, cloud-
based apps won’t be
deployed on Legacy
Clouds

46. Carriers need to build
Legacy *and* Web-scale

48. +

49. +
Focus first on Greenfield

50. +
Focus first on Greenfield
Pricing 20% < AWS

51. +
Focus first on Greenfield
Pricing 20% < AWS
High Margins

52. +
Focus first on Greenfield
Pricing 20% < AWS
High Margins
Higher Performance

53. +
Focus first on Greenfield
Pricing 20% < AWS
High Margins
Higher Performance
< 9 months to market