Industry behemoths – the gas and oil, automobile manufacturing and defense industries, for example – are notorious for rigid bureaucratic structures, an aversion to abandoning sunk costs, entrenched interests from long-time employees and more. The same could be said for many telecommunications operators whose deeply rooted business models have relied on traditional voice and data network services.
One consequence of operator inertia has been the rise of a new class of industry players. Over-the-top (OTT) companies that deliver services via the internet have steadily chipped away at telecom turf. Apple, Google and other OTTs have built strong consumer connections in part because of their mobile-centric mindsets and user convenience.
Personal cloud is one area in which OTTs have seen astounding success. At the end of 2019 in the United States alone, personal cloud service providers reported 407 million users, according to management consultancy Arthur D. Little. Given that the population of the United States was only 328 million at the time, clearly many people were taking advantage of multiple personal clouds.
Because telecom providers today only claim about 1% of the U.S. personal cloud user base, some operators may believe the chance to capitalize on cloud has passed. This could not be further from the truth. As Arthur D. Little estimated, the addressable personal cloud market in the United States, which currently stands at $3 billion, will rise to $5.1 billion in 2025. This represents a compound annual growth rate of 12%. Globally, the personal cloud market is estimated to be worth between $15 billion and $25 billion in less than five years.
The extremely small piece of personal cloud owned by today’s operators means little when compared to what’s there for the taking.
Five Key Market Trends
This market potential becomes even more enticing when you consider five additional trends that have created a perfect storm of opportunity for operators.
- Exponential growth of data. Mobile devices, laptops and home computers serve as primary repositories for our most cherished and important data. Individual users, for example, have on average 630 photos and 24 videos stored on their mobile devices, according to one report. Add contacts, documents, music and more, and it should be no surprise that the use of cloud storage and backup solutions are now a must-have instead of a nice-to-have service.
- Demise of free or low-cost OTT personal clouds. iCloud, Amazon Drive, DropBox, Google Drive, Microsoft OneDrive and other OTT platforms have dominated the personal cloud marketplace in part because most offer free or extremely low-cost service. However, this low price point combined with the exponential growth of personal digital content means providers are quickly approaching storage capacity. Google already announced it is killing unlimited free storage and putting a cap on the number of free photos and documents that may be uploaded to its cloud service. And where Google goes, others are likely to follow. Consumers who are losing access to free or low-cost cloud services will be open to new cloud providers, which is excellent news for operators who already have well-established relationships with subscribers.
- Spread of 5G networks. Although discussions around 5G often focus on its ability to fuel transformative technologies, 5G also improves the experience for individual consumers who rely on mobile devices to connect with friends and family, interact with social networks, and document their lives. 5G in combination with the convenience of an operator-run personal cloud allows subscribers to instantaneously back up and protect all content, including HD and 4K videos; search for and view content directly from personal cloud accounts with no buffering; and even offload files o reduce the need for expensive high-memory devices. An additional incremental operator revenue opportunity can come from introducing cloud as a value-added service on top of a subscriber 5G wireless broadband service.
- Desire for simplification. People find the use and management of personal clouds increasingly complicated. Why? Because content is frequently dispersed across multiple mobile devices, home computers and multiple cloud services. Multiple cloud accounts lead to multiple passwords, disjointed backup and – if you don’t ignore the OTT movement away from freemium models – multiple invoices that quickly add up.
- Demand for privacy. Consumers are concerned about how OTTs mine user data to monetize and share across multiple services and platforms. Trust is one area where operators’ reputations are especially solid. Expect consumers to increasingly turn to operators to safeguard data privacy and ensure compliance with governmental regulations such as GDPR and CCPA.
Act Now Before It’s Too Late
Operator cloud-based backup solutions are not new. Many telecoms already offer a version of minimal free storage to subscribers, though those same operators are often lax in promoting that capability and converting network subscribers into paying cloud customers.
Today, however, all signs point to a personal cloud revolution poised to ensure that 2021 will be the year operator personal cloud takes center stage. To ensure they are not relegated to dumb pipe status, operators must shake organizational inertia, take advantage of converging market forces and quickly put in place the tools needed to ensure they are not simply perceived as a supplier of network connectivity but instead as an essential provider of critical services. The result will be stronger customer relationships and increased opportunities to grow revenues.
To transform itself from a simple voice and data provider into a partner committed to providing a means for subscribers to interact with their most important content, an operator must:
- Put in place an operator-branded robust, feature-rich personal cloud solution that accommodates all data classes and allows for unlimited and continuous data backups from all a subscriber’s mobile devices.
- Develop premium personal cloud bundles that provide collective storage and a secure place to share content with those who share a single operator account, thus eliminating the need for multiple cloud accounts.
- Launch 5G broadband service for the home and bundle with the cloud to give subscribers the ability to easily capture, protect, sync and share content across all connected devices in the home – mobile phones, tablets, laptops and desktop computers – to a single personal cloud destination through sophisticated mobile and desktop applications.
Those who fail to take the leap risk being left behind and missing out on a critical growth opportunity. The time to act is now before it is too late.