I've often pondered the apparent lack of operator innovation and success in providing personal cloud services to users. I've never understood why many operators seemed to give up so quickly on offering services that automatically stored and backed-up messages and contacts, as well as pictures and videos. There were obviously early issues around bandwidth and with sync technologies, but to me it made intuitive sense to offer users an "about me" web page, where they could not only manage their content, but view their call history, messages, manage contacts etc. Hell, operators could even start to drive integrated messaging views across email and social media platforms, offer online IP voice etc. if they wanted to get really fancy. Then you could add in services such as payments and wallets, gradually building towards the whole "operator as trusted iD manager" vision many have for telcos.
But let's not get carried away – the basic product, the starting point, was of content upload and storage, making content accessible from different devices for a small extra fee per month, or free, or priced on a freemium basis at per-Gb levels of storage – whatever worked best. Pricing wasn't necessarily important. This would be an entry-level product to get users used to dealing with an "about me" page – the entry to cloud comms services, if you like. Yet despite Apple's MobileMe debacle, and even some continuing moans around iCloud, and the late entry of Google's Drive, operator innovation in this area has been wanting, and the telcos have largely failed to fill a gap in the market that is only now being filled by the much-feared internet players. It's not that there have been no attempts. In our piece below, the writer references the failure of V360 – yet of course that was about much more than providing a cloud content service. V360 was a grand vision of integrated app store + deviceOS and UI integration. Something lighter and more agile, and less obviously related to corporate empire building, could perhaps still work.
So does the cloud service opportunity still exist, and how do operators address it? In this guest article, Hal Steger of Funambol picks up the baton and runs. It's worth a read, whether you agree or not with his conclusions.
Keith Dyer, Edtor, Mobile Europe
The Next Big Oper-tunity: Storing Media on Smartphones and Tablets in the Cloud
By Hal Steger, Vice President of Worldwide Marketing, Funambol
People are using smartphones more than ever to capture pictures and videos. Smartphones are supplanting digital cameras and camcorders due to their convenience and ability to instantly share media. While it is great that users can access pictures and even videos on their phones, as the volume of media grows, it begs the question of where to store it permanently.
This topic is acute for several reasons. Mobile devices are especially prone to loss, theft or breakage which results in loss of mobile media. If a PC is used as the permanent repository, the media is not protected when the hard disk crashes or the PC becomes obsolete. Another issue with media on PCs is that it is generally unavailable outside the home, unless the user has copied pictures or videos online. If pictures and videos are on a removable memory card in a phone, it is possible to transfer the card's content to a PC, but this requires effort and knowledge.
Storing media on Facebook and Google+ is fraught with risk, given their shifting privacy policies. Social Other online media sites require manual uploading via PC or mobile device and without regular uploading, people are at risk of losing media in between sessions.
There are new personal clouds that store mobile photos and videos online. iCloud is one of the best known but there are others, such as Google Drive. Gartner published a report that said that the personal cloud will replace the personal computer as the center of user digital lives by 2014. They just published another report that says that 1/3 of consumer data will be stored in the cloud by 2016.
The issue with device clouds such as iCloud is that it only supports one brand of device. If a user doesn't exclusively use Apple, or they are part of a family or workgroup that doesn't exclusively own Apple gear, they are looking at their Apple content in iCloud while their non-Apple content is elsewhere. Another aspect of device clouds is that users are particularly sensitive to lock-in, such that they do not have an easy or cost-effective option to utilize content in other clouds. A good example is the iTunes tie-in to iCloud. While many people enjoy the convenience of buying an iTunes song and having it automatically in their iCloud account such that it is available on all of their iCloud devices, many others are wary of being dependent on Apple, with some calling it a 'prison'.
This is where operators can step in and use a white-label personal cloud solution similar to iCloud that works with the vast majority of mobile phones, tablets and personal computers. The operator cloud can provide a web portal to allow people to access their media, as well as files, contacts, calendars and other content from anywhere. Unlike file-centric clouds, the operator personal cloud can allow people to view pictures and videos visually on all their devices as opposed to just looking at file names.
Another advantage for operators is they can provide users with automatic syncing of content from all their devices into their own private cloud that is not mined for ads, such that the operator cloud becomes more trusted for a user's digital content. Operator clouds can make it easy for users to selectively share pictures and videos, via email or Facebook, Twitter, Picasa, Flickr, YouTube, etc.
Revenue and loyalty
Consider that if by using a personal cloud, the average subscriber stays with an operator for even a month or two longer. If you multiply that by ARPU, for an operator with millions of subscribers, the benefit can easily reach the billions of dollars.
An operator cloud can be highly attractive to users for several reasons. First, it does not lock them into a particular family of devices. Even if someone is wedded today to a particular smartphone or tablet, they can migrate to another or additional device without losing pictures, videos or other mobile content, or having a legacy isolated device cloud. Further, it provides users with the flexibility to store their data and media where they want, rather than forcing everything to a specific location. For example, if a user already keeps their digital pictures on their PC or Mac, and has already established an online account with Flickr or Picasa to store their photos (for sharing or backup), an operator cloud can act as a smart intermediary that allows people to continue using their pc and online media site, while making the user's content available on all of their mobile devices and backing up additional content in the cloud. The operator cloud can act as a 'cloud of clouds', i.e. a smart aggregator that provides benefits to users beyond those provided by a device cloud.
By using a white-label solution, it promotes the provider's brand to the user rather than another brand. The fact that a user stores their mobile content in their cloud increases the user's affinity toward the provider. This has significant potential to reduce churn for operators and other mobile providers, which is particularly appealing in this era when loyalty for mobile carriers has hit an all-time low. Consider that if by using a personal cloud, the average subscriber stays with an operator for even a month or two longer. If you multiply that by ARPU, for an operator with millions of subscribers, the benefit can easily reach the billions of dollars.
A white-label personal cloud also positions a mobile provider for additional revenue generation. For example, just as iTunes integration into iCloud makes it convenient for users to purchase music, movies, e-books, apps and other digital content, operators can integrate their stores into their cloud, to become a seamless, 'one-click' cross-device distribution channel for their digital goods. Mobile providers can also directly monetize personal cloud users, by offering premium services with additional capabilities, such as more storage, extended backups, photo printing and enterprise services.
Identifying the risks, learning from the failures
Offering a white-labeled personal cloud service is not without risk. Prior operator-led clouds such as Vodafone 360 did not succeed. People can debate why but it often comes down to operations and marketing. With Voda 360, there were reports that it did not run smoothly. In addition, it initially only ran on two smartphones that most people didn't want. All this proved was that a cloud service must work well and support devices that people want. It also implies that operators must make a focused effort to introduce the service and ensure its adoption.
Another question with operator clouds is whether they are better than device or content clouds with respect to lock-in. If operators want to reap the full benefit of a personal cloud, it is using it to keep customers loyal, so how can operators do this without lock-in? The answer is to enable users to migrate content to other services, while providing an excellent service that deters people from leaving. There are many examples in other industries of great service provided by companies that breed intense customer loyalty and a personal cloud service has the same potential.
In sum, the market for personal cloud services is rapidly growing. A personal cloud should be viewed by operators as a foundation on which to layer new revenue generating services. There is no question that over-the-top service providers such as Apple and Google are aggressively pursuing this approach. Operators are in a unique position because they have already invested in a billing, customer service and trusted relationship with customers, so offering a personal cloud service is a natural extension.
Hal Steger is Vice President of Worldwide Marketing at Funambol. He has more than 20 years of marketing and product management experience at high-growth, innovative global software companies. Prior to Funambol, he was co-founder and VP Marketing at Rubric, the company that pioneered the category of Marketing Automation solutions.