MWC: CEOs assess cloud damage

February 29th, 2012 by · Leave a Comment

This article was authored by John C. Tanner, and was originally posted on

“Mobile cloud” was the topic du jour for the second round of morning keynotes at the Mobile World Congress Tuesday, but C-level executives spent much of their stage time talking less about the cloud itself and more about the havoc cloud is wreaking on the telecoms sector and the changes it’s undergoing as a result.

Deutsche Telekom CEO Rene Obermann said the cloud was an opportunity for telcos to “make the most of our assets” and transform themselves into smart pipes.
“Most people expect us to become dumb pipes, but that’s wrong. The question of whether we will be dumb pipes or smart pipes will be a thing of the past,” he said, arguing that operators will have a role to play in areas such as traffic management and QoS.
Obermann said the cloud is also an opportunity for telcos to show that they can innovate, particularly in three key areas: connectivity (integrating multiple access points, from 3G. 4G and Wi-Fi to DSL and fiber seamlessly “so the customer doesn’t know what they’re connecting with and doesn’t have to care”), enabling third parties to innovate via open APIs, and new products.
Cisco Systems chairman and CEO John Chambers warned delegates that as the world moves from the “connected society” to the “hyperconnected society”, the cloud is accelerating the rate of innovation in telecoms and IT that all companies in the value chain will find it increasingly tough to keep up.
“Think of the market transitions going on now. You have to stay ahead of innovation, the speed of innovation is so fast that you have to catch key market trends five to seven years ahead of their time,” he said. “The inflection point for innovation used to be every four to seven years. Now we have to reinvent ourselves constantly.”
Chambers said that telecoms and IT players alike can no longer afford to lag behind the times or keep up just enough to get by.
“Average is over. In three to five years, so will above-average,” Chambers said.
Meanwhile, Alcatel-Lucent CEO Ben Verwaayen said the greatest fundamental change the cloud has wrought on telecoms is the ability to focus on individual customers – something telcos have never really been good at.
“We talk about big numbers being tossed around in terms of how we’ll be making gazillions of dollars in whatever currency you want to name. But there’s one number we’ve had trouble with for generations: ‘1’,” he said.
Verwaayen said that historically telcos have had no tools to recognize the individual customer, and no business motivation for doing so apart from the ability to send the engineer to his house.
“Now the technology is here to make that fundamental change. And that’s the greatest change we’re seeing in this industry, in my opinion,” he said. “Who is a winner or a loser won’t be decided by this room or this conference – it will be decided by consumers.”

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