Subscriptions to cloud storage services to reach half-billion level this year, says IHS iSuppli

Subscriptions to cloud storage services to reach half-billion level this year, says IHS iSuppli

Market news |
By eeNews Europe

The subscriptions are expected to jump to 625 million next year, a solid increase of 25 percent, with uninterrupted double-digit growth anticipated to follow until at least 2017. During that year, subscriptions to cloud storage are projected to hit 1.3 billion, as presented in the figure attached.

“In an environment where mobile devices like smartphones and media tablets handle broadband data on a near-ceaseless basis, businesses are realizing the importance of cloud services in allowing consumers to manage, store and sync content across their devices,” said Jagdish Rebello, Ph.D., director for consumer & communications at IHS. “And with companies casting about for new viable business models in order to monetize data traffic, cloud-based services could help lead firms into the next revolution of the wireless industry—or at least remain pertinent in the new mobile broadband paradigm. However, providing cloud services is not profitable as a standalone service, challenging companies to identify value-added services that could generate revenue.”

The dash to provide cloud services is sweeping through companies of all shapes and stripes—from the wireless providers who have a lock on broadband spectrum; to corporate titans like Amazon, Google, Microsoft and Apple; to independent and pure-play cloud storage providers like Dropbox, Barracuda, Carbonite, SugarSync, Synplicity, Funanbol and Mozy.

Amazon’s Cloud Drive, for instance, lets users buy commercial content like music, movies and ebooks, which can then be stored and played on multiple devices that they own. Similarly, Google has introduced its own cloud music service for consumers to upload personal music, to which they can listen anywhere. Apple likewise allows users to purchase, store and access content via its iCloud offering.

Overall, cloud computing is a dramatic game changer, representing a fundamental shift in the way broadband data is handled by both consumers and service providers. This is true even while issues of security and compliance still need to be addressed. Other roadblocks—such as content fragmentation, content portability and privacy—also exist that could prove problematic to the industry’s vision to achieve the seamless synching, sharing and consumption of digital content from the cloud.

Breaks in the clouds for wireless providers

As digital pictures, video, music and files are generated, purchased and stored across multiple clouds and devices, the material becomes increasingly difficult to find and manage. Even more challenges arise as people hoping to store and access cloud content use additional mobile and connected devices, including ebook readers, cameras, camcorders, media tablets, Internet-enabled TVs and connected car systems.

It becomes critical then for a cloud service to manage the content in an organized fashion, ensuring

that people know where their media is located, what devices are capable of supporting which type of content, what is backed up, and what works online or off. Issues of data loss, unauthorized access and mining for marketing purposes—with or without consent—must also be handled, with the cloud service able to strike the correct balance between providing convenience to users while also respecting their privacy.

Such challenges provide key opportunities for wireless providers, also known as mobile network operators (MNO), to offer differentiated personal cloud services to consumers.

Already supporting many different brands and types of devices on their networks, MNOs can offer personal cloud solutions that allow users to store a wide variety of data and content from different services in a single location. The single-site solutions should be able to aggregate and store personal information data such as contacts, calendars, tasks and notes, as well as rich media like pictures, video and music files—all done from multiple sites, services and devices. Content from such external sources can also be indexed or stored. In particular, wireless operators are uniquely positioned to provide such a digital vault—or trusted hub—for digital media assets: Unlike Google and Facebook, wireless operators and carriers do not need to mine the data for marketing purposes.

In turn, the new value-added cloud services made available to subscribers and users will allow the wireless carrier to develop important new revenue streams. Cloud services can also create stickiness and churn, fostering customer loyalty. With large amounts of data stored on an operator’s cloud service, users are likely to be more reluctant to migrate their content to another operator at the end of a contract period because of the hassle involved.

Capitalizing on the consumer cloud

Despite the rush among companies to provide cloud storage, the business itself is costly to run. IHS iSuppli estimates that the cloud industry will continue to be cash-flow negative from pure cloud offerings; independent pure play providers of cloud storage will find it especially difficult to remain financially viable.

Such a handicap, however, could offer MNOs an opportunity to partner with pure-play providers and allow the joint entity to offer an enhanced package of value-added services to both their customers.

It is also essential that mobile providers go to market with their own branded cloud storage service, with users storing data and content in the providers’ cloud—rather than on the cloud offering of some other entity. Otherwise, all that the provider is doing would be to promote and build someone else’s business, passing up the chance to retain customer loyalty, IHS believes.

Ultimately the winners will be those offering personal cloud services that support diverse mobile devices and content, while offering value-added services that enhance the user experience, increase subscription loyalty, reduce churn and provide a foundation to generate new and incremental annual revenues that could well amount to billions of dollars.

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