Big telcos jumping on the cloud computing bandwagon will not force the smaller guys out and may, in fact, bring more business to market, according to Melbourne IT.
The likes of Telstra and Optus have already made it clear they want to do more cloud business with each making significant investments into the area.
Hosting and Web domain name registration company, Melbourne IT, has noticed the trend. In response, it has decided to adopt a predominantly direct sales model for its Enterprise Solutions business despite having secured some of its bigger contracts through in-direct means.
“But what we found is telcos in particular are wanting to consolidate and own end-to-end solutions with customers so we’re being left out of the mix now,” Melbourne IT CEO, Theo Hnarakis, told ARN. “By going direct we can prove our credentials to an end customer, who can still choose to have part of their relationship with telcos but also use us for hosting.”
All this is to ensure the company stays relevant in this area. But being much smaller in size than the telco giants, Melbourne IT isn’t interested in becoming a direct competitor with them in this field.
“We’re not trying to compete with telcos, we’re just going to where it suits us such as when customers decide to take on specialist cloud and hosting player,” Hnarakis said. “We don’t necessarily want to be lumped in with one end-to-end solution which customers wouldn’t find of value anyway.”
While having telcos playing in the cloud space seems to have put the likes smaller channel players in a David versus Goliath situation, Melbourne IT doesn’t see it like that at all.
Yes, more competition is obviously bad for business but it does bring some benefits.
“The positive is the more telcos go out and educate the market about the benefits of cloud and outsourcing, the more growth we see in that area,” Hnarakis said. “So there will be enough business for all of us.” After all, even the telcos have to compete with the likes of Amazon and Google that also offer cloud services.
“There are a lot more competitors but there is a lot more business as well,” he said.
Big Players like Telstra, Optus, Amazon and Google can provide large scale cloud-based services but they are rarely customisable and do not offer flexibility, according to Hnarkis.
The likes of Melbourne IT can fill that gap.
But what if the behemoths decide to move down the ladder and offer specialist cloud services? To Hnarkis, that prospect seems unlikely.
“It doesn’t suit their business model since they tend to be less custom and more one-size fits all,” he said. “I don’t envisage they will go down that road only because it would require more resources and specialisation.
“What telcos are taking advantage of is their scale.”