Giant telcos look to the cloud

In the battle for enterprise customers, giant telecommunications and cable companies are going to the cloud, reports the New York Times.

According to Web Host Industry Review, CenturyLink, one of the largest telecommunications carriers in the US, revealed that it had entered into an agreement to buy managed hosting provider Savvis in a cash and stock merger worth a total of approximately $2.5 billion.

Most observers agree that there is an enormous opportunity in the cloud hosting market. But as many analysts and players have pointed out, the current opportunity for profit won't last much longer, as competition and price pressure push margins smaller - a reality that may be driving the consolidation we're seeing in the space.

Meanwhile, Larry Steele, VP of software-as-a-service at Savvis, says tying cloud services to transport services is a natural next step, and most likely a positive one, unless telecom operators try to create standardised cookie-cutter approaches to delivering cloud services, reveals Light Reading.

“When I start hearing about cloud brokers and cloud standards, I get nervous because I think there is still so much innovation that has to happen,” Steele says. “This is becoming a services world - that is where competition is, and that is where innovation still needs to happen.”

Steele believes the key to competing in cloud services lies in the continual change that comes with having to win customers' hearts month by month. Service providers will have to work harder if cloud services remain a pay-as-you-go option, without long-term contracts to lock in customers.