Orange’s CEO mentioned during a business show on French TV that Orange is receiving money from Google for transmitting Google’s traffic (most of which stems from YouTube). No details about the financial arrangement of the year-old deal were disclosed.
So, does the Orange-Google deal mean that Orange has won a true victory and that the balance of power between carriers and OSPs is restored? Does the deal really address the challenges of the carrier world? Hardly.
Carriers rely on video content that drives demand for high broadband connectivity. Moreover, consumers already pay the carriers for their broadband connectivity. In my opinion, there is a valid argument that those end users who want high-quality video should be able to have it at extra cost. But this extra fee could be paid directly to the carrier in the form of a high-end broadband connection fee. Alternatively, the carrier could offer wholesale connectivity to OSPs, allowing the OSPs to offer content that comes with embedded high-quality connectivity.
So what does VMware and EMC’s announcement of the new Pivotal Initiative mean for I&O leaders? Put simply, it means the leading virtualization vendor is staying focused on the data center — and that’s good news. As many wise men have said, the best strategy comes from knowing what NOT to do. In this case, that means NOT shifting focus too fast and too far afield to the cloud.
I think this is a great move, and makes all kinds of sense to protect VMware’s relationship with its core buyer, maintain focus on the datacenter, and lay the foundation for the vendor’s software-defined data center strategy. This move helps to end the cloud-washing that’s confused customers for years: There’s a lot of work left to do to virtualize the entire data center stack, from compute to storage and network and apps, and the easy apps, by now, have mostly been virtualized. The remaining workloads enterprises seek to virtualize are much harder: They don’t naturally benefit from consolidation savings, they are highly performance sensitive, and they are much more complex.
During Huawei’s 2012 EMEA Analyst Event in Amsterdam, Huawei emphasised once again its commitment to Europe and its dedication to innovation. With sales of $3.8bn, 7,300 staff, around 800 of which are in R&D, and 10 R&D centres in Europe, Huawei has positioned itself as a leading provider of network infrastructure in the region. The main themes that we picked up during the event are:
Its carrier activities are increasingly dominated by software. Huawei emphasises the role if IT and software as a core focus area of its carrier network infrastructure activities, which still account for 74% of sales, going forward. Softcom, Huawei’s strategy to drive software defined networking and to move towards a flatter network architecture, is central to this transformation. By 2017, Huawei aims to generate around 40% of its network infrastructure revenues from software-related activities. The central goal of Softcom is to decouple applications from hardware in the network infrastructure and to integrate multiple operating systems into one cloud-based operating system. To succeed, Huawei needs to attract top IT expertise. Its partnerships with leading universities and research organisations like Fraunhofer-Gesellschaft go some way.
The other day I had an interesting discussion with Google about their Fiber-to-the home (FTTH) infrastructure. Google’s reasoning behind the move into the network infrastructure space stems from the belief that online growth and technology innovation are driven by three main factors:
The cost of storage, which has fallen considerably in previous years.
Computing power, which has increased in previous years.
The price and speed of Internet access, which has been stagnant for a decade. Today, the average Internet user in the US receives 5 Mbit/s download and 1 Mbit/s upload speed.
Vodafone agreed to acquire Cable & Wireless Worldwide (CWW) for 1.04 billion pounds in cash, valuing CWW at three times EBITDA. The deal propels Vodafone to the second largest telco in the UK with revenues of GBP6.97 billion, behind BT with revenues of GBP15.6 billion. From a financial perspective, the deal has a limited impact, accounting for only 3% of Vodafone’s 2011 EBITDA. However, given BT’s lack of a mobile division, Vodafone, becomes the leading integrated telco in the UK, offering fixed and mobile operations. The deal is expected to complete in Q3 2012.
The main focus of the deal is on CWW’s UK fixed-line network and CWW’s business customer base, both of which Vodafone aims to add to its UK mobile network. CWW provides managed voice, data, hosting, and IP-based services and applications. The deal boosts Vodafone’s enterprise offering, both in terms of access and transport infrastructure and also in terms of customer base. CWW is a major global infrastructure player: Its international cable network spans 425,000 km in length, covering 150 countries. In the UK, CWW operates a 20,500 km fiber network. Moreover, CWW has about 6,000 business customers. The future of CWW’s non-UK assets remains uncertain. In our view they do provide true value for Vodafone, strengthening its global network infrastructure. Vodafone will provide further details regarding these non-UK assets later in the year.
Last week I attended Telefónica’s leadership event, which is held annually in Miami, reflecting its very strong basis in the Americas. This year’s event attracted around 700 visitors from 130 countries, comprising Telefónica’s customers, vendor partners, and analysts. There were several external keynote speakers, like the CIO of the US government, futurologist Michio Kaku, and the chief economist of the Economist Intelligence Unit, that outlined the macro context for society and the economy over the coming 10 to 20 years. Presentations by partners like Huawei, Microsoft, Nokia, amdocs, and Samsung highlighted visions of the future from a vendor angle. Telefónica itself used the opportunity to present its own vision of how technological progress will affect society and business — and how it intends to address the opportunities and challenges ahead.
Telefónica stands out from its peer group of incumbent telcos by having revamped its overall organizational structure. The firm had already announced this new structure last fall; it effectively sets up one division that focuses on global internal administration and procurement (Global Resources), one division that focuses on emerging Internet-based solutions (Digital), and two geographically focused go-to-market-facing business lines (Americas and Europe). Telefónica Multinational Solutions is part of Global Resources and is the division dedicated to delivering services to the MNC segment.