Carrier Clouds, Amazon Tablets

Verizon has taken yet another “leadership” step in defining how operators see their revenue futures.  The company has indicated it would be likely acquiring small software companies to create SaaS offerings hosted on the Verizon cloud.  I don’t think that the significance of this move is being appreciated, and so I want to open this week by explaining it.

Everyone has been infatuated by the notion of cloud computing as anointing the small and destroying the strong—it’s been a kind of populist theme that’s evolved in parallel with the whole Internet revolution.  The problem is that it’s not a practical vision of the market.  The big money in cloud computing comes from two sources—PaaS-based offloading of SOA app components from enterprise data centers for backup and overflow work, and SaaS opportunities to SMBs and even some enterprises.   The big money’s still out there, and Verizon wants it.

AT&T is moving in this area too, and one interesting development there is that the company is working on the issue of asset creation/exploitation and not just the issue of APIs or cloud architecture.  They’re looking at how to take legacy assets in the OSS/BSS space and make them available as APIs for integration into higher-level services (by developers and, we’re told, by internal service architects).  They also want to integrate their smart appliances into their content services, not only as elements in a multi-screen strategy but as controlling tools to manage media and the experience.  Finally, they hope to formulate a general-purpose HTML5-based architecture for their proto-smart-device GUI so that applications will run across the full range of stuff that’s rolling out.

Amazon, meanwhile, is apparently getting into the tablet business, or so says PC Magazine and some other sources.  My own view is that Amazon is going to compete with the Barnes & Noble Color Nook, a product that I’ve gotten myself and find enormously interesting, powerful, and helpful.  The issue here isn’t becoming a tablet player, it’s defending the ebook space against a competitor who’s using a tablet feature set to enhance e-reader value.  Every Nook that’s sold is a B&N camel’s nose under the ebook opportunity tent.  Amazon can’t sell Kindle books to that market, and of course B&N profits from the lock.  So Amazon has to become a player in what I’ll call the “t-reader” space, a space that is almost a tablet but that lacks the ability to host competing e-reader software and so still locks the consumer in as a traditional e-reader would.

Amazon needs to make sure that they don’t lose customers to the Color Nook because they need to be sure that they don’t let B&N create a legion of book-hungry semi-tablet enthusiasts that can’t get Kindle without rooting their Nooks.  The question is whether they can do something at this point, when the B&N device is out there and competing effectively, without giving away too much and hurting their profits even if they win the t-reader race.

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