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The next big thing after cloud computing: PEERCLING…

March 27, 2011 9 comments

A lot of people are still getting their head around what can be done with Cloud Computing. However I would like to present the next big thing that will come after cloud computing has gone mainstream. It is called peercling!

What is peercling?

Peercling stands for P2P + Cloud Computing or Peer2Peer + Cloud Computing. Peercling addresses the main problem with Cloud Computing: “Network Outage”. Once we move all critical systems to the cloud, we will be totally dependent on having network connectivity. We can have all the high-availability distributed systems on the server side. If our ADSL, 3/4G, Fiber, etc. connectivity fails it will be a no use at all.

How will peercling solve network outages?

SaaS is all about running the application in the cloud, no client apps are necessary. Peercling will slightly reverse this trend. Computers, mobiles, tablets, etc. will need to install a peercling run-time environment and will have to download peercling apps. Why? A peercling app is your life-line when the network goes down. Let’s take a critical SaaS application like a Point-of-Sale (POS) as a Service. A POSaaS allows retailers to scan bar-codes and present you with the bill of your purchase. What if connectivity goes down? A retailer would be stuck with paper-based accounting.

If that same retailer would have a POS Peercling app then he would have a local copy of the product catalog and he would be able to sell you the items. If the POS Peercling app would have lost connectivity to the Internet but would still see other POS Peercling apps that are on the same LAN [Think multiple checkouts at a supermarket], then all purchases could be automatically backed-up to the other apps so there would be a high-availability alternative should the Internet connectivity break and a POS would crash at the same time. As soon as the Internet comes back up it would be the peercling platform that would synchronize with the SaaS back-end and inform about the transactions that took place while there was a network outage.

So peercling is like a mobile phone app that runs locally and synchronizes with a backend system. However the big difference is that the peercling app also can survive without connectivity. If the LAN is still working then P2P technology is used to distribute data and transcations. Afterwards the peercling platform will bring everything back in sync when the network is back.

However peercling can do more. Imagine a large call center that relies on a CRM in the cloud to have all caller’s data. Every agent would have a CRM peercling client that would store part of the caller’s data locally (in encrypted format). Multiple replicates of the same data would be stored on different agent machines. Everytime an agent makes an update it would both be sent to the CRM in the cloud as well as to the agent machines that store data about the specific caller. Since the data is too large to be stored on one machine, P2P technology is used to distribute it over a large set of agent machines. When the CRM in the cloud goes down or Internet connectivity fails, then local copies will be used to continue offer service to the callers until the cloud is available again.

Why should telecom operators be interested in peercling?

Telecom operators have a unique asset that sets them apart from the rest of the world: Network Quality of Service Control. To avoid networks from going down because of too much illegal file sharing, telecom operators tend to downgrade the maximum speed a P2P app can download. This same mechanism [network policy control] can be used inversely as well. Peercling apps could pay to have network quality of service assured. Peercling apps that would need to move large amounts of data can pay to get QoS levels assurance.

Tablets are going mainstream. More 3G subscriptions but less calls and SMS…

iPad 2, Samsung Galaxy Tab, Motorola Xoom, Notion Ink Adam, ASUS EEE Pad, Dell Streak / Looking Glass, Archos, Acer Iconia, LG Optimus Pad, Viewsonic ViewPad, Kno, Hannspree Tablet, etc. The list goes on and on. 2011 will be the year the tablet went mainstream. Thank you Steve Jobs!!!

Although a good percentage of tablets will come with 3G connectivity, and even 4G future-expandable connectivity, does this mean that telecom will get another cash-cow? I do not think so!

Yes operators will sell another SIM and the associated monthly data charges. But with people having to buy multiple SIMs, they will want to see discounts. Users will want plans that focus mainly on data. This means to have price plans that reduce calls and SMS monthly costs to the minimum. The idea is that they would use their phone to call and their table to surf.

However what is likely to happen is that users will come into situations where they want to communicate with people from their table. Since calling and sending an SMS is too expensive with their tablet data subscription they will install more and more instant messaging and VoIP apps. Pretty soon users will get accustomed to use video chat instead of just voice calls.

The end result will be a boost to IM, VoIP and video chat apps. If you use them on your tablet, then you are more likely to also start using them on your iPhone or Android. The final result might be that subscription revenue goes up for the operator but call and SMS revenue goes down significantly as well. Perhaps the overall outcome in revenue is positive but the final result is that at the end of 2011 operators are seen as data plan providers, a.k.a. bit-pipes.

There is no quick fix for the operators. Launching some operator-build tablet apps will not reverse the curve. Nobody wants Faceclone or SMSitter. People want the real thing.

A drastic shift is necessary in the operator to form part of this new eco-system, see long-tail telco.

 

Voxtrot will be stealing calls away from mobile operators!

Voxtrot is built by some of the original Skype team members. Unlike other mobile voip apps, this one has a real potential to change end-user’s behavior. The big difference with Skype and others is that Voxtrot does not assign you yet another username or phone number. You register with your original phone number. When you are calling somebody then Voxtrot will check if the other party is also connected to Voxtrot. If both parties are connected to Voxtrot then the default option will be to use VoIP instead of a mobile call. The Voxtrot call will be  “free” – at least if you are on WiFi or have a large enough data plan – instead of paid. As such Voxtrot will have stolen a call away from the mobile operator…

Although Voxtrot is essentially similar to Skype and others in VoIP technology, the easiness of going VoIP together with the social aspect of inviting all your friends, is really setting it apart from the competition.

Voxtrot is currently only available for Android but plans for an iPhone version were made public.

Operators will have to accelerate their search towards alternative revenue sources or risk becoming bitpipes sooner than later.

LTE will kill the telecom cash-cow. Is your cash-calf ready to take over?

Long Term Evolution, LTE or sometimes also referred to as 4G, is the next generation mobile network technology.  It promises to bring network speed to the mobile that can beat the current ADSL offerings. In the beginning LTE prices might be high but competition especially from new entrants – “the Ryanairs of telecom” / “4G Bitpipes” – are likely to bring affordable pricing plans soon. The US already has the first “4G Bitpipe players”: Clearwire and Lightsquared.

So what does it mean if tomorrow you can have ADSL-like speeds for an (almost) flat-rate. In practice, end-users would be crazy to still pay €0,15 for minute for a call or per SMS. Skype with its optimized codecs (e.g. SILK) will offer better voice quality and will throw in video for free. Instant messaging, Twitter and Facebook chat will completely substitute SMS. This will be the end of the telecom cash-cows: calls and SMS…

What will be the next cash-calf? For those operators that are still looking for the “Killer App” – that single technology that only telecom operators can offer and is extremely successful – I have some news. Postal services are still looking for their killer app after the stamp was substituted by email. So is the music industry. There is no economic law that says that a former monopolist has the right to pick its next monopoly.

So if there is no “Killer App” does it mean that all telecom operators are doomed to become bit-pipes tomorrow? Over time several will but not necessarily all. Although dotcoms have the sexiest solutions, large corporations are unlikely to massively shift their communication services to a heavily indebted 25 people company close to a surf-paradise beach. So due to inertia the abyss is still some years away. However should you just give up and let  consumer ARPU drop year by year?

I believe there is still a window of opportunity for telecom operators to bring new appealing services. However they must be willing to abandon some important historical laws of telecom.

1) Standards slow innovation

Collectively negotiate a standard that is more a political compromise then the simplest, most effective way of doing things is not helping innovation. In the Web 2.0 era, dotcoms launch new ideas all the time. Most of the time it is a “winner takes it all or at least most” market. So the winner sets the standard. How many Twitter competitors do you use?

By designing an architecture around obscure standards, few operators have employees that can explain their company’s architecture. Google and others have invested heavily in their architecture. They constantly update it. But on a blackboard a Google architect can draw you exactly why they choose Bigtable, GFS, etc.

2) Don’t talk about subscribers, call them users

A subscriber is an entity that signs a monthly contract with a telecom operator. By doing so a subscriber seems to subscribe to a list of applications that the marketing department of the telecom operator has preselected as the most adequate for him or her. The operators seems to know what is best for their subscribers. WRONG!!!!!!!!

Call them users and give them the tools to select/create/design/customize/configure the services they want. Let the community vote about which feature is needed. Ask users why they stop using a new service after a week. Let users define the price they are willing to pay by offering multiple alternative solutions in different price ranges with different feature sets.

3) Go from a catalog of few to an infinite catalog

If Telecom can no longer survive based on a few hit services, then they could go to the other extreme: the long tail telco. A long tail telco offers an almost infinite catalog of solutions that combine communication assets with other solutions in order to solve user’s problems, to make them more productive or to entertain them.

Users should be able to combine products to resolve their needs. A good example is what is offered by Invox. Via wizards, templates or a Yahoo Pipes drag-and-drop configuration, small to large enterprises can configure their own telecom services like call centers, PBX, etc. They can easily integrate the best of the Internet (Salesforce, Google, Yahoo, etc.) with IP-based communication. You use what you need. You configured it the way you want it.

What is missing is a market in which those users that don’t want to do it themselves or who need specific support (e.g. custom integrations), can go and find the right help.

Telecom operators should no longer focus on end-user services but on enabling the end-user and an eco-system of independent third-parties to be able to create and sell solutions and services to one another. As long as it is easier, faster and cheaper for a third-party to use an operator’s tools and assets they will see no need to design an alternative solution. This brings us to the next point…

4) Monopolists die because of greediness

Revenue shares of 40-95% are often not in line with the value and risk the operator takes in the value chain. Those operators that think that “squeezing partners until the last drop” is a good long-term strategy, will be the first to die. Innovation needs out-of-the-box thinking. People don’t take risks if they don’t see rewards.

You will need to do more than to just blindly follow these four rules. But by applying them and listening to users, you are on your way to create new cash-calfs…

When will operators offer visual VAS designing tools?

A long list of startups are making it easier every day to create and customize value-added services. These tools mainly focus on two segments:

  • soho and small enterprises with visual PBX, call center as a service, etc.
  • consumer oriented with voicemail, mobile apps, etc.

The main players in this new market are small startups. Companies like Twilio with OpenVBX, InvoxPBXPlus, etc. Also some established players offer solutions: e.g. App Inventor and Voice from Google, Yuave from Nokia Siemens Networks, etc.

I am still waiting for the first telecom operator to offer a similar service. Neither of these services is nuclear science. Most are SIP or other VoIP solution based. Via a SaaS marketplace operators could be reselling them if they don’t want to license or build. Additionally the operators have some valuable assets that dotcoms would love to make use off: micro-payments a.k.a. billing/charging; free call forwarding; numbering plan creation; high-available network assets; quality of service; etc.

Scalr, how to simplify cloud operations beyond Puppet and Chef

In previous articles I wrote about automating cloud operations as a key to successfully and quickly launching new services.

You can use Chef or Puppet to automate the deployment of servers. However neither solves some of the other problems with cloud operations: autoscaling and disaster recovery.

Scalr is relatively new and still a bit rough around the edges. However it has great promises to simplify deployment, automate scaling and quickly recover from server outage. Scalr uses the out-of-the-box functionality from Amazon to quickly bootstrap an environment via AMIs. Afterwards it implements an alternative autoscaling that does not rely on Amazon’s. Disaster recovery depends on the type of server but it can automatically recover from master database failure and other elements in a typical scalable web architecture.

Work on extending Scalr towards other providers like Eucalyptus and Rackspace seem to be work in progress.

Scalr is  not only a good sample of the 80-20 rule in which they focus on the most common scenarios. However via a plugin mechanism it is very easy to extend. I expect other public cloud providers to contribute plugins in the near future.

At the moment Scalr is still rough around the edges but definitely with the right push of some startups and public cloud providers it should quickly mature. With some custom plugins a telecom operator that is thinking about IaaS and private clouds should definitely look at it and inspire themselves…

 

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