Today’s cloud environment has picked up steam from a “customer acceptance” point of view: customers are adopting cloud in general at a much faster rate than we had expected them to. We no longer pitch cloud — our clients ask us about it. And, while cloud has been a boon for many, it’s important to remember that new technologies can come with a set of challenges that are shifting the telecom and IT markets in various ways.
Cloud started on the email side with products like Office 365, then moved into phone systems with hosted technology; now we get questions about moving servers to the cloud. The transition from email to phone to infrastructure was rapid, and all three are still growing. From the transformation of backup (moving from tape to cloud) to the developments from giants like AWS, cloud is an ever-evolving beast. And we expect to see more in the way of private cloud infrastructure in the future.
Price Erosion Forces Change
Price erosion on connectivity and network deals is a big concern in the telecom world these days, and cloud offers the opportunity to pivot and go deeper with customers by offering more solutions. But it’s important to call out our experience here at SinglePoint in this regard: we have not felt the effects of price erosion the way we thought we would because the need for bandwidth has kept up with the erosion.
Where we were selling 10 Mbps, we now sell 100 Mbps. Where we were selling MPLS, we are now selling SD-WAN. While pricing does keep going down, market trends have pushed us to rethink our partnerships and our sales model as well as to adopt and use cloud as a product. It has forced our hand to move more into IT from the pure telecom sphere we used to work in, and we have made partnerships in order to conduct IT risk assessments and build upon private cloud architecture.
Cloud Changes the Market
There have been continual mergers and acquisitions across carriers, and as the big get bigger, we have fewer and fewer providers. Now, we see all these new providers coming up; not as carrier services, but as cloud companies and hosted phone companies. Where there used to be 50 CLECs, there are 100 new hosted phone companies and hundreds of new SD-WAN companies. As they come out of the woodwork, we see cloud changing what businesses are offering.
What’s in Store
In 2015, our core carrier products (internet, MPLS, voice services, etc.) were 90% of our sales. In 2016, 40% of our sales were non-traditional telecom products such as cloud systems, hosted contact management solutions, hosted phones, cloud-based architecture, and cellular. That huge shift tells us to expect more change, and to think ahead about our offerings.