Enterprises still see telcos mainly as a connectivity pipe: ABI

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Despite telecom operators frantically seeking to enter new enterprise markets and create new business opportunities, technology implementers predominantly rely on telcos for connectivity and not for value-added, vertical specific services.

That’s according to data from a recent ABI Research B2B technology survey, which indicates that 55% of implementer respondents expect to use telcos for connectivity alone. Only 13% of survey respondents expect telcos to create new ecosystems for IoT, data-related, IT, and cloud services.

“While telcos aspire to soon become technology enablers for several end markets, more than half of the actual technology implementers surveyed show limited interest beyond basic connectivity,” says Dimitris Mavrakis, research director at ABI Research. “The connectivity market is, and will, remain, profitable for many telcos worldwide, but our survey indicates that there is some interest by technology implementers in more than pure connectivity. This is what we refer to as Connectivity+.”

Connectivity+ involves bundling vertical-specific services on top of connectivity. Telcos take advantage of their existing assets, like data, devices management, applications and services management, security, and analytics to add value for implementers. According to the survey, 31% of respondents said they favor this approach.

The survey results also indicate that telcos cannot, and should not, compete with web-scale companies for cloud computing services.

A discouraging 4% of implementers aim to utilize telcos for cloud computing services today, and this will drop to 1% in the next five years. On the contrary, 12% of respondents are using hybrid cloud today. This will increase to 38% in the next five years, as the industry emphasizes the growing importance of using more than private and public cloud services on a standalone basis.

“Verizon has done well to offload its cloud businesses and other Tier 1 telcos will follow,” concludes Mavrakis. “Competing with web-scale companies in their own field is impossible for telcos. Implementer requirements and telco strategies seem to be disparate for the moment. For example, telcos are focusing on the automotive vertical, but our survey indicates that the retail, government, and logistics markets are very interested in telco services.”

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