Operator Personal Cloud Disruption

Hal Steger : Thinking Out Cloud
Hal Steger
Vice President of Worldwide Marketing at Funambol. 20+ years of marketing & product management experience at high-growth, innovative global software companies.
| This blog is about personal cloud solutions, technology, trends and market developments. Its scope is to comment on and discuss several aspects of personal clouds.

Operator Personal Cloud Disruption

The operator personal cloud imperative has shifted.

The main drivers for operators to have a personal cloud used to be revenue and user retention.

While some operators achieved these, others did not. In simple terms, it was due to a shortfall of users converting from free cloud storage to premium, as there are good free alternatives, coupled with a lack of a compelling reason to upgrade. This resulted in some operators not achieving a critical mass of users that moved the needle on retention. Which users have really thought, I am not switching mobile providers due to my operator cloud? While some Apple users might think of iCloud as a reason to stay Apple, when it comes to an operator cloud, for many people, it is not a first order consideration.

Yet, despite this, prominent operators continue to significantly enhance their personal clouds. Why? Is it a defensive stance such that operators are concerned that if they don’t, Google will be the main repository of their users’ content or are there other reasons?

Some operators that partnered with Dropbox decided it was not to their advantage to continue. This was likely due to the lack of conversion to premium resulting in a dearth of revenue, and if a subscriber became a Dropbox user, user loyalty was to Dropbox. The more an operator relied on Dropbox, the less this helped the operator. But that was yesterday’s news.

The news today is what operator clouds are becoming, and how user behavior, economics and innovation are disrupting them.

People now are more comfortable with the cloud. Although many people still do not understand it, and they still have concerns about privacy and security, there is the belief that more stuff is going into the cloud and this is largely unstoppable, thus, it is okay to put more stuff in it. This is driven by numerous things, among them, people having more mobile devices and using an array of online services. For many people, the situation has changed from what is the cloud to how do I ensure it is safe, it remains private, how do I find my stuff and make sure it doesn’t disappear.

Economics is further disrupting operator clouds. Amazon recently implemented a change where data in its cloud that is not accessed for 30 days automatically moves to storage that costs 1 cent per Gb per month instead of 3+ cents. This change is transparent. If you think about cloud storage for consumers where people store keepsakes such as photos, videos and files, the vast majority is rarely accessed, which means it can reside on archived storage and the cost is a third. How many businesses see that their operating costs are slashed by two-thirds overnight?

The third thing disrupting operator clouds is innovation. Personal cloud software has changed from smartphone bloatware to be much more entertaining via creative views of personal content and facilitating family interaction. Beyond turning operator clouds from boring backup into engaging services, the clouds are fulfilling another important function for operators, which is to glue together emerging services.

Operators are getting into new businesses, such as more video content, home security, internet of things and car services. At the same time, operators are seeking to leverage strengths, which is their billing relationship, their status as a trusted entity, and people relying on them for mobile devices, expertise and services. Rather than bombard people with a confusing array of apps, services and content, operators see an opportunity to use their personal cloud to tie together services to simplify mobile lives.

This has shifted the impetus behind operator personal clouds to become a unifying interface that auto-organizes content and presents it in meaningful and engaging ways. This is a far cry from personal clouds that are backup and it is the direction of personal clouds going forward.

The moral for operators is that a) you need a personal cloud service; b) it should not be based on a legacy backup service but it should tie together emerging services and content in an engaging and meaningful way, where the mobile experience is paramount, not a cobbled mash-up; and c) it must leverage the economics of disruptive improvements in cloud infrastructure. If your personal cloud service does not do this, it will be substandard and non-competitive versus over-the-top and other operator cloud alternatives.