Has Microsoft inadvertently given the telcos breathing space?

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Written By: Paul Bevan
Published: 16th May, 2011
Content Copyright © 2011 Bloor. All Rights Reserved.

All the focus last week was on the $8.5 billion that Microsoft paid for Skype and whether the Redmond-based company would be able to work out how to make the most of their purchase. However this purchase, and the less heralded acquisition of Savvis by US telco CenturyLink, point to renewed realignment activity as suppliers jockey for position in the rapidly growing cloud services market, and throws a sharp spotlight onto the position and prospects for the telcos.

I have long argued that the telcos were ideally placed to be leading cloud players. They have the customer base, both consumer and business, and they have the networks. They have aspired to be strategic IT partners. Yet, repeatedly, they have failed to understand how to offer value above the basic voice and data traffic services that are their bread and butter.

Their attitude to VoIP is reminiscent of the head in the sand attitude of the record companies to music downloads, and they have allowed others to gain a lead in Unified Comms that should have been their market to dominate. The trend towards telcos becoming commoditised bit-pipe providers is not new, but Skype had the potential to accelerate that process. It would have been unwise to think that they weren't busily addressing the issues of architecture, security and value-add services that were blocking their push into the business market.

Now the Microsoft acquisition is likely to slow that work, and there is no guarantee that they won't alienate a significant proportion of Skype's large user base. CenturyLink have recognised the need to provide a different range of services; will the other telcos take advantage of the potential ‘pause' and get their act together? If they aren't into buying cloud hosting companies, providing a well-articulated Unified Comms offering for business might be a good place to start.

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