traffic and services demand is growing fast, yet service providers'
margins are getting squeezed as falling real incomes, competition
and slow reactions to the changing operating environment "are
forcing operators to embrace new revenue services and business
models - including the Cloud - to enhance profits," according to
the IHS Suppli Mobile & Wireless Communications Services
The "explosive rise of broadband usage on smartphones and tablets"
is driving the shift in business strategy and models and broadband
wireless service providers have been slow to react, according to
the special report.
Mobile communications service providers have lagged behind in the
race to unlock the value in the mobile communications industry,
which is estimated to grow to a trillion dollars during the next
two years," commented Jagdish Rebello, Ph.D., senior director and
principal analyst for communications and consumer electronics at
IHS, in a "press release.
The average operating profit for wireless service providers
worldwide declined in 2010 as a result, he continued, though
margins at semiconductor and device manufacturers increased.
Cloud-based services for tablets and other mobile
devices that represent a new revenue stream for wireless carriers,
and they need to take risks and drive innovation in order to
capitalize on this opportunity, Rebello said.
"With the transformative impact of tablets and consumer-centric
smartphones, the pace of change is accelerating in the wireless
market. And to reclaim their share of profits, wireless carriers
must be willing to take risks, move fast and be innovative in their
In the report, IHS forecasts that consumer and enterprise spending
on public Cloud services will grow to $110 billion in 2015 from $23
billion in 2010. IHS analysts believe wireless carriers can capture
about 7% of that total spending in 2015, up from less than 1%
Global wireless data revenue is also growing, by almost 18.5% in
2010 to $218 billion. IHS forecasts that will grow to some $337
billion by 2015, yet the profit margin for wireless service
providers declined to 19% in 2010, down a percentage point from
2009, the report notes.
"Booming" sales of media tablets are driving up wireless data
traffic, IHS notes. Media tablet shipments will increase to 60
million units in 2011, up a whopping 245.9% from 17.4 million in
2010. They'll continue rising, to 275.3 million in 2015, according
Missing Out on the Cloud Shift
Wireless carriers are missing out on much of the opportunity,
however. Many tablets don't offer cellular connectivity, and in
many cases are being sold without any service subsidies, IHS points
Moreover, in contrast to smartphones, tablets don't rely on
advertising from wireless carriers. That means they
miss out on fees associated with mobile broadband access for
tablets' data plans.
Wireless carriers need to focus on other segments of the wireless
data market, value-added services, including the Cloud in
particular, IHS says.
At the same time, the shift to Cloud services
poses major competitive challenges to wireless carriers,
particularly from traditional IT providers, such as EMC, IBM,
Microsoft and NetApp, as well as Apple, Google and online e-tail