Technology | Media | Telecommunications

Thursday, May 15, 2014

Consumer Cloud Service Users will Pass 3.6B by 2018

There have been many attempts to define cloud computing over the years. The abstract notion of something being placed in a 'cloud' somewhere on the Internet can be puzzling. Regardless, for mainstream consumers, the cloud brings with it a level of flexibility unmatched by anything that came before it.

In particular, where broadband service providers have established ecosystems of products, the cloud enables seamless interaction, which in turn has raised the bar in terms of what consumers expect from products today -- although most consumers are unaware of it, this convenience is driven by the cloud.

Juniper Research forecasts that the number of unique consumers accessing cloud-based services will exceed 3.6 billion by 2018, rising from an estimated 2.4 billion in 2013.

The findings from their market study highlight that an expanding group of connected services within cloud-based storage, music and games will drive consumer demand over the next five years.

Streaming Music Apps are Driving Growth

According to the study findings, despite the success of cloud-based storage providers attracting large numbers of users, they are failing to capture a significant percentage of premium subscribers.

In contrast, music streaming services such as Spotify are claiming the lion’s share of revenues, when compared to storage or games focused applications.

This is partly due to the availability of extensive music catalogs that are way beyond the storage limits of the mobile device, coupled with low subscription costs.


Profitability Challenges for Service Providers

The study also found that cloud-based music streaming and storage service providers are facing a tough battle to turn revenues into profit as they try to find a balance between premium tier pricing and the scope of the basic, or free tier.

Players such as Pandora and Spotify have yet to turn a profit, while Ubuntu recently withdrew from the cloud storage space, citing the current price wars as being unsustainable.

Meanwhile, the cloud games market, where game computation is located entirely in the cloud, is experiencing somewhat of a renaissance following the re-launch of OnLive and the market entry of PlayStation.

Nevertheless, with online games effectively being streamed from the cloud, latency may hamper the success of this emerging market opportunity.

Other key findings from the study include:

  • The Federal Communications Commission's failure to ensure an open Internet threatens to stifle the U.S. Over-the-Top streaming market. As a result, American market growth could be threatened.
  • Network operators should quickly embrace new technologies such as WebRTC and NFV (Network Functions Virtualization) to increase margins.