FierceTelecom's 2011 Predictions: Cloud services continue to gain prominence

The profile of cloud services continues evolve from just being the darling of Web providers Amazon and Google toward a new revenue driver for competitive and incumbent carriers alike.

Cloud service profile will continue to gain prominence in 2011 as more businesses and even consumers look to offload functions including storage and even managing traditional everyday software applications like Microsoft Word.

To cash in on the cloud services opportunity, incumbent carriers including AT&T (NYSE: T), Orange Business Services, Qwest (NYSE: Q), TDS Telecom (NYSE: TDS), Verizon (NYSE: VZ) and Windstream (Nasdaq: WIN), data center/colocation providers like Equinix (Nasdaq: EQIX, Level 3 (Nasdaq: LVLT), and Telx, and managed providers including Virtela continued to expand their cloud service capabilities throughout 2010.

Service providers will continue to target the cloud services opportunity on three fronts: expanding their data center facilities internally or through acquisitions, crafting partnerships with application and solution providers, and developing vertical market specific applications.

Service providers, of course, have been coming at the cloud service opportunity from various angles.

Orange Business, for example, continues to be busy introducing new cloud services (VPN Galerie) and creating partnerships with other members of the cloud services ecosystem, including Cisco, EMC, and VMWare via its Flexible 4 Business alliance.

Independent ILECs have been no less aggressive on the cloud front as well. TDS Telecom and Windstream, for example, both made strategic acquisitions in 2010 of cloud computing and data center providers including TEAM Technologies and Hosted Solutions.  

Not surprisingly, as service providers continue to ramp up their cloud service efforts, vendors are getting their own cloud strategies in order. Two vendors to pay close attention to in 2011 around cloud services will be Cisco (Nasdaq: CSCO) and Juniper (NYSE: JNPR). To bolster its cloud services strategy, Cisco hired Sun Microsystem's former cloud guru Lew Tucker as its vice-president and chief technical officer for cloud computing systems. Juniper, meanwhile, plans to introduce routing and switching products to support its Project Stratus program, which it said in a recent Network World report will deliver a flat, unified fabric for data centers and cloud computing environments.

And while the initial focus of clouds could have benefits with larger enterprise customers--once the security kinks of the service are properly mitigated--a new IDC study reveals that SMB use of cloud services are on the rise. While only 7 percent of small to medium businesses (SMBs) were using cloud services as of April 2010, by mid-2011 the research firm forecasts that that number will rise to over 10 percent.

Regardless of the customer focus or potential cost savings of adopting cloud services, the overriding concern and challenge that service providers and vendors will have to address for every business that plans to adopt cloud services will be around how secure the service is. But from the looks of it, vendors and service providers will continue to make efforts in 2011 to address those issues.  

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