After those M&A predictions from New Year's Eve and before the first 2014 news starts to flow in, let's talk about a few overall trends to watch in 2014 in telecom and internet infrastructure. Everybody's got their own list these days, so I'll just focus on a few:
Fighting Back On Privacy and Security - The Snowden affair and all the NSA revelations that have emerged since then have stunned pretty much everyone in the sector. Some of the larger content companies have already begun to respond of course, e.g. Google and Yahoo moving to encrypt data between their data centers. But I think that trickle is going to become a flood, because frankly we've all been lax at all levels for so long on that front and what the NSA managed to get its hands on laid it bare not just for the 'good' spies but for everyone. When it comes to securing data there is a lot of low hanging fruit, from the carrier level on up to the enterprise. It's going to get a lot of attention this year.
Figuring Out the LTE Economy - So LTE rollouts are now well underway on most fronts and billions of dollars have been spent along the way. The question now turns to just how to make money from it all in a telecom world where legacy products are flagging, bottlenecks are moving out to the edge and thus multiplying, and net neutrality is anything but a done deal while everyone is looking for a way to go over the top. But just what value does having big bandwidth to people's pockets and refrigerators really bring to their lives that they will pay more for from a wallet that isn't any fuller than before? It's gotta be in there somewhere, but the next wave of killer apps is not yet so obvious to me.
Battling For the Cloud Will Get More Intense -- Telcos, pure plays, systems integrators, cable MSOs, managed service providers, and just about everyone else thinks that the cloud is where their future revenues lie. They've all been arming themselves to the teeth whether inorganically or organically, but the opportunity has been mostly theoretical. In 2014 we will start to see just who has the advantage and who doesn't, what gets commoditized and what doesn't.
The Cloud Starts To Coalesce - Since it came on the scene, the word 'cloud' has been used as an umbrella buzzword covering a huge amount of service territory. But those actually deploying cloud-based services are specializing, and we are starting to see distinct market shapes coalesce in the mist. This year they will get clearer to the extent that we start to see them as entirely separate market opportunities once again, although the word 'cloud' itself will still be everywhere of course.
Fiber Will Make More Money Behind the Scenes - All the consolidation that has gone on in metro and regional fiber will be followed by steady, profitable organic growth. The demand from mobile data and cloud services isn't going away, and the parts of the industry that now understand how to make money off of it by putting fiber in the ground will just be happy to keep on doing that. While there will surely be a high profile deal or two, the business of physically hooking stuff up to the internet isn't sexy right now, but nobody in it cares much if it the ROI works.
Do you have any other trends out there that you'd like me to add my two cents to? Post a comment below and I'll do my best.
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