As the Carrier vs. cloud competitor discussion has raged over the past few years, it seems there has been a truce called in the last few months. Rewind back a few years ago and the Web Internet Companies (WICs) and Carriers were mortal enemies fighting over the same space. As such, Carriers moved to buy or build their own Cloud data center operations. Verizon buying Terramark for 1.4B in 2011 being just one such example.
In parallel to that, the Cloud operators (most notably Google) moved to aggressively build out their own fiber networks, effectively threatening to overbuild the Carrier networks. Both these positions were largely based on the same thesis. These companies would inevitably occupy the same space and be offering the same products in competition.
Fast forward to today, and these strategies are being re-thought for several reasons.
- The cloud data center spaced is very crowded, margins are tight and Carriers are having difficulty competing against the WICs with scale (Google, AWS, etc.), and are moving to sell the data centers they purchased just a few years ago.
- Web Internet Companies have recognized that it may not be in their best interest to own a lower margin communications network compared to the rest of their businesses. Thus companies like Google are scaling down their deployments of Google Fiber.
With recent announcements between ATT/AWS, Telstra/AWS and DT/MSFT to just name a few, both parties have now realized that success may be in the form of collaboration, not competition. Mike Blanche, Head of Strategic Telco Relationships, Google was quoted in October saying, “It’s true we compete with operators in a few areas but not as many as you think”. Success in this market may now be in both partners doing what they do best – Carriers delivering the highest quality network for enterprise, mobile and consumers, and WICs offering innovative, high-value. cloud services to be consumed as bundles within these networks.