Asia/Pacific Telecom Predictions 2014: Chasing the Next Trillion Dollar Opportunity

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Telecom service providers will continue to undergo massive transformation in 2014 pressurized by survival instincts and dynamic competition on several fronts.

IDC believes 2013/14 are early innings for many in chasing the next trillion dollar opportunity and expects that the more progressive telcos will not be recognizable as their traditional connectivity business will no longer be their mainstay and will account for less than half than overall business. 

"It is hard being a telco these days," empathizes Adrian Dominic Ho, Principal Analyst, IDC Asia/Pacific.

"Their traditional connectivity business is treading water at best. The next period of giddy growth will come from rebranding themselves as the connected service provider build upon the foundations of cloud, analytics and mobility technologies.

"IDC expects that many telcos will find themselves in deep trouble if they do not find a way to relinquish their old business model." 

Says Ho, "However, telcos start from a position of strength because of their installed base of customers and the intelligence they derived from that relationship, which they can leverage and monetized via building that connected marketplace that will be worth more than a trillion dollars by 2020."

Drawing from the latest IDC research and internal brainstorming sessions amongst IDC's regional and country analysts, the following are the top 10 Telecommunications Predictions in 2013. These represent major trends with either the most significant financial impact or long-term market impact across the Asia/Pacific region.

(1) Cloud channels redesigned. IDC expects this to be a US$65B (enterprise and consumer) market by 2020. Innovative new channel models will emerge in 2014 that will allow telcos to scale faster. This will include cloud brokerage, leveraging the enterprise channels to bundle both Infrastructure-as-a-Service (IaaS)/Software-as-a-Service (SaaS) with their enterprise customers core offerings and monetization of the consumer cloud opportunity.

(2) Value creation with B2B2C solutions. This model allows the service provider to monetize each solution twice by working with their enterprise customer and the consumer who would consume solution in an "as a service model". This would include content and applications. Verticals that IDC expects to be early targets for this model include retail, hospitality, tourist attractions, airlines and healthcare.

(3) New frontiers with role based selling. Approximately 23% of Chief Marketing Officers (CMOs) in the region hold an IT budget. This proportion is expected to rise and service providers who have serious enterprise intention will need to extend their touch points beyond CIOs and network managers to CMOs and Line-of-Business (LOBs). IaaS, Business process as a Service, marketing applications and analytics are some of the technologies that are likely to involve CMOs and LOBs.

(4) Software based IT to support innovation. SDN is expected to receive a lot of attention from 2014 onwards as service providers look to leverage that technology to launch cloud services, as networks can now be provision "as a service" and this can dramatically lower cost. For enterprises, the networks will become their competitive advantage as they can now launch new services more quickly.

(5) Big data is monetization's best friend. There are several ways that telcos will start to monetize big data in 2014. This would include being the depository for both structured and unstructured data, offering it "as a service", implementing it for their enterprise customers, leveraging it for xCommerce/M2M services and possibly selling customer data to enterprises with laws permitting.

(6) The new app-cessories opportunities. This is expected to be a significant part of telcos' smart connected device opportunity in the future. IDC expects telcos to start bundling wearables with existing smart devices sales, building ISVs ecosystem around wearables and leveraging intelligence from their consumers.

(7) Eyeing the xCommerce marketplace. Strengthening of mobile wallets, micro financing and mCommerce are some of the early opportunities that telcos have moved into. xCommerce is the collision of both the physical and virtual world but represents one of the largest single opportunity in the eICT world. The challenges for telcos include building that warehousing, logistics and transportation infrastructure. 

(8) Revolutionizing business models with Internet of Things (IoT). Expect billions of things to be connected by 2020 but IoT will allow almost all enterprises to create new revenue streams and business models. The role of service providers would include everything from providing basic connectivity to middleware/architecture, analytics and devising vertical integrated solutions for their customers.

(9) Death of BYOD to enterprises. Security concerns will lead enterprises to pivot from Bring Your Own Device (BYOD) to Choose Your Own Device (CYOD) in some mature markets. This will lead to growth in mobile application management, development, security and customization for service providers as these are the areas where enterprises will focus and invest in over the next 12 to 18 months.

(10) Smart connected devices reinvention. The rise of phablets and Asian white box phone vendors will dominate 2014. The opportunities for telecom service provider are several fold which include partnering and working closely with these vendors to broaden in-build local applications and functionality as well helping them build an application marketplace.

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