CloudBits from Cloudike

So its that time of year again where we pack our bags and head to Barcelona for Mobile World Congress! As a carrier or retailer, diversifying your offering and revenue stream sits at the top of many KPIs this year. We want to share the experiences our customers have had to see how we can help your brand generate that extra $2 million or more per year.

You can catch the 1-pager after this link or sign up to meet up at MWC after this link as well.

Carriers are now focusing on the lifestyles of their users in order to provide them with not only connectivity but also a portfolio of applications to support and enhance their digital lives. 

In higher GDP mobile markets such as the US, Canada and western Europe, consumers have become familiar with being offered free access to services such as Spotify or Netflix for a limited period as an incentive to sign up to a data plan. While the basic packages offered are similar, these add-ons are typically unique. However, these promotional offerings of overthe- top (OTT) services are not sustainable because of the additional cost they represent for carriers. 

Greetings from the Cloudike Team!

We want let you all know that on September 8th, Cloudike will be exhibiting at Startupnight in Berlin, supported by the Skolkovo Innovation Centre!

It’s been a big year for us and we see this as an opportunity to trot out some of new technologies such as our AI-assisted face recognition (pictured below). Book a meeting and come by to see some of our latest technology!

For mobile virtual network operators (MVNOs), value added services (VAS) have proven to be one of the only options to combat low average revenue per user. At MWC Shanghai 2017, Cloudike is offering MVNOs with a revenue-share white label cloud option to add to Chinese MVNO’s arsenal of VAS.

Low ARPU?

Mobile virtual network operators (or MVNOs) represent one of the fastest growing sectors in Chinese mobile. In the past year alone, it is estimated that MVNOs in China service over 43 million users, or 3% of China’s mobile connections. Yet, even with a rapidly growing userbase, Chinese MVNO consumers are still characterized by one key indicator: Low average revenue per user (ARPU).

For MVNOs, low ARPU isn’t a new trend. MVNOs have found value in providing flexibility as a selling point to the end consumer. Whether it’s bring-your-own-device (BYOD) options or niche data packages catering to specific crowds, MVNOs have had to innovate in their offerings as both a cost-effective telecommunication provider and a niche service provider.

For example, Chinese MVNO market leader, Snail Mobile, ties in gaming as a draw for possible consumers. The MVNO offers users its own native gaming app store as well as credits for certain games as well. A strategy that has provided fruitful given their Chinese MVNO leading 8 million subscribers in under 3 three years.  

Cloudike + You

At Cloudike, our expertise has been in providing traditional mobile carriers with a white label cloud service for consumers. From our previous experience, we know that personal cloud is a highly sticky service (with 65% of users accessing the service on a weekly basis) and increases customer engagement with carrier native apps (users uploading anywhere from 2GB to 12GB on initial use).

Given our proven track record, our presence at MWC Shanghai will be to provide MVNOs with the same offering at a different model. We realize that the value of personal cloud to MVNOs is to become a VAS that users will actively choose to use. To that end we’re offering the following:

Stand Alone VAS

50 GB personal cloud storage + 5GB wireless traffic for access (provided by the carrier)

Price to end user: US$1/month or US$10/year (3-month free trial)

Cost to mobile carrier: 60% revenue share to Cloudike

Result: Revenue growth from direct sales

Bundled Service

Up to 1000GB of personal cloud storage, included with wireless tariff

Price to end user: Free (included with wireless tariff)

Cost to mobile carrier: Per user cost ($0.125/month)

Result: Revenue growth from reduced churn &increase in subscriber life-time value

Bundled data with zero-rated services is the future of mobile. Either get with the program or consider your carrier dead.

Forget the critics, the net neutrality advocates, and the pundits. Mobile carriers have — and will continue to offer — consumers an online service that uses data, but not against their data cap because, to be frank, that’s where the money is.

While at one point the battle between carriers revolved around the total allotted data given, the industry has now shifted towards what consumers want to do with that data.

The battlefront is now about finding what consumers want rather than letting them pick and choose. Yes, consumer choice is vital but curating the services that consumers will respond positively to (and providing unlimited access) has shown to be the most lucrative and enticing option for carriers.

While the headlines have revolved around content-based zero-rated services, non-content has seen skyrocketing adoption and growth rates as well (more on this later). While the US is enthralled with services like T-Mobile’s Binge On, who’s to say that unlimited data spent on RCS won’t have the same effect? Or how about a zero-rated personal cloud?

We’re just seeing the tip of the zero-rating iceberg, and the mobile industry is in for one hell of a ride.

Quick primer on zero-rating

Zero-rating allows mobile carriers to offer users a data-consuming service without counting the data used against a data cap, meaning I can stream shows from the likes of HBO without the data counting against my data cap.

A recent example was when Pokemon GO first launched and T-Mobile gave customers a limited time zero-rated service for the app.

Zero-rating: a history

In the days of data caps, it wasn’t so much what you could do with your data but how you wanted to spend it. Sure, you could go and watch a 1080p video on YouTube, and when that ate up a good chunk of your data plan, you played it super safe unless you wanted to incur the wrath of mobile carriers, also known as ‘overage charges’.

Facebook and Twitter sought to address that fear of spending data on their platforms. As early as 2010, Facebook began offering what they called ‘Facebook Zero’, designed to offer users in emerging markets a data cap-free version of the popular social media network. Twitter followed in Facebook’s footsteps four years later with ‘Twitter Access’, partnering with some of the world’s largest mobile carriers to offer barebones (no graphics, images, videos, etc.) Twitter.

However, zero-rating does not have a prodigal history — it has seen its fair share of resistance in a few select markets.

Take for example India, where the Telecom Regulatory Authority (TRAI) has ruled against zero-rated services in principle. Banning “discriminatory tariffs for data services on the basis of content,” the ruling put a dent in Mark Zuckerberg’s campaign to implement ‘Free Basics’ across India with mobile carrier Reliance Jio.

And on the premise of net neutrality, places like the Netherlands, Slovenia, and Holland have all opted to create legislation against zero-rating.

…And carriers don’t care

However, the legislation changes and looming net neutrality threats have done little to hinder mobile carriers from offering zero-rated services.

In the US, T-Mobile started the onslaught of zero-rated data bundles with Binge On, allowing customers to watch Hulu, HBO, and Netflix, among others, free from data cap. Other carriers like AT&T’s Sponsored Data and Verizon’s FreeBee program have replicated T-Mobile’s success and are expanding their zero-rated services repertoire by the day.

Even in India, where the TRAI put a halt to zero-rating on paper, Reliance Jio still found a way to offer consumers a bundled data package that, in essence, includes zero-rated services such as TV streaming.

It’s a very low key disruption, to say the least; after legislators found ways to curb mobile carriers from discriminating services by offering services free of data caps, the carriers did away with the concept and instead offered fixed pricing for unlimited access (bundled into the data plan of course).

Carriers around the world, whether Reliance Jio in India, Vodafone (worldwide), or U-Mobile in Malaysia (among others), have made their choices clear: they will offer zero-rated services and consumers have responded by using more data than ever.

When it happens, it’s absolutely beautiful

So just how much do consumers want it?

Research showed that 20 percent of T-Mobile customers upgraded their services to get zero-rated video. A whopping 89 percent of US wireless customers reported that Binge On would be appealing to them. In short, customers want in.

However, zero-rating isn’t just limited to music or video.

The example of a white-label cloud for mobile carriers can demonstrate the awe-inspiring power of zero-rating.

Can you figure out which one of them offers a zero-rated cloud service? The growth rate between the linear graphs and the hockey stick curve is nearly 10-fold. We’ve found that carrier three’s customers are not only signing up more but also using the cloud far more frequently as well.

And we’re almost certain that other apps being offered through zero-rating must be seeing similar hikes in growth.

Where is zero-rating taking us?

One way or another, carriers will find a way to offer zero-rated data bundles. It’s far too lucrative and popular with consumers not to.

As for where we go from here, we’ve only just started to see the full potential of zero-rating. Zero-rating is perhaps one of the few times we’ve seen mobile carriers bringing OTT services into the fold. And for services such as these, zero-rating means a whole new ball game when working with carriers.

We’re on the road again! 

Our Co-Founder, Max Azarov, will be at the Service Provider & Investor Forums! He will be there until the following Monday.

Our General Manager, Sejung Yun, will be in Hong Kong from Dec 4 ~ 7.

Our Co-Founder, Max Azarov, is back at it again!

Back in 2013, cloud software in the public mind consisted of Dropbox, Microsoft, and Google’s ‘one-size-fits-all’ solutions. If you wanted to get into cloud, the smaller freemium cloud startups had just started to fold (BitCasa, SygarSync) and overall, most insiders would’ve warned against trying a cloud startup.

Yet, mobile service providers (MSPs), like AT&T and Verizon, were rolling out their own cloud platforms – quietly occupying a surprising 35 percent market share. When we examined their cloud services, having worked on LG’s potential cloud platform, we knew we could do better.

With that vision, in 2013, myself and five other ex-LG cloud employees launched Cloudike to take our own swing at MSPs across the world.

In search of cloud

We started by looking to regions that were still growing their network infrastructure and were a couple of steps away from needing cloud usage. This included Southeast Asia, eastern Europe, and the Middle East. In actual terms, we were targeting roughly two billion people.

The market research was very promising. In regions like eastern Europe, nearly 81 percent of all Internet users in 2015 were accessing the web from their phones, processing close to 550,000 terabytes(TBs) a month; in 2016, that number is expected to jump to 87 percent of mobile Internet users processing 950,000 TBs a month in the region.

In other regions like Southeast Asia, countries like Vietnam and the Philippines have just started scratching at the growing number of cloud users thanks to increased web connectivity and infrastructure.

One country, many challenges

Now our product isn’t culturally offensive or damaging to local businesses, yet we faced surprising logistical and regional challenges each time we sought to enter a new market.

For example, Russia and some of its immediate neighbours in eastern Europe face serious Internet security issues. 'Therefore, web security and user authentication implementation become increasingly complex. This is especially the case for MSPs, as they have access to sensitive customer information.

When we first launched Cloudike with Megafon in Russia (a cool 62 million customers), users were having a hard time logging in. Given that MSPs typically don’t beta test new software or services (though they do go through extensive testing), our launch and product testing were rolled into one phase. We had to address issues as soon as they came up, so that Megafon and their customers could access their cloud and be protected from potential hackers.

In Southeast Asia setting the right prices was a new challenge. We came to understand that customers in Southeast Asia had much lower revenue per user (RPU) than customers in say, Korea or Russia.

And of course, everywhere we went, we had to adjust to local holidays and work schedules. In some cases, due to shifted work weeks or national holidays, we only had four-day weeks to make sure everything was on schedule and ready to go.

Our go-to pitch

Before anything else can happen, MSPs need to see references. While we had a fantastic product and a highly experienced team, MSPs still wanted to see a track record of success.

To a degree, we understood their perspective. Launching a product with an MSP meant you could instantly access their entire customer base. For a company like Vodafone in Turkey, that was 21 million subscribers, as of 2014.

Mapped and ready

Working with MSPs, our path to success was one we had to map out ourselves. Looking back, we can see that we had vastly underestimated the issues and challenges we would face. Many of them turned out to be completely different from what we expected. That said, after being in business for three years, we’re seasoned veterans, ready for the next challenge.

OTT messaging apps have massive user bases, which surpassed 1 billion users. It seems almost insane that something could unthrone them. 

Yet, recent announcement from Google and GSMA change the playing field for good and we predict that OTT messaging will see a fearsome competitor raising from ashes.

This week Cloudike team is joining Vodafone colleagues in Turkey in celebrating the country-wide launch of 4G. Cloudike-enabled Personal Cloud is one of new key strategic services, which are rolled out together with 4G/LTE connectivity. 

Please welcome - Vodafone Güvenli Depo ! 

A full-featured and lightning-fast Personal Cloud service hosted in Turkey at state-of-the-art Vodafone data-centers. 

While rolling out LTE, many mobile carriers face a problem of data plan inflation. Facing competitive pressure carriers are pushed to increase data allocation for their entry-level data plans to the point where it gets difficult to upsell customers to higher-margin data packages.

The most straight-forward way to address this problem is to encourage data consumption. Pushing video or mobile TV streaming services will do the trick. There are several problems with this approach though:

1) It increases bandwidth requirements for the operator’s network; 2) It often requires substantial investment in content licensing, which can be quite costly for video content.

Is there a better way?

Mobile carriers today are bundling data with other services to increase their pricing power. The golden standard for bundling is: data, voice and messaging. What should the next service be?

Candidates for carrier service bundling are plentiful: video streaming, music, mapping, etc. So, how can the carrier decide where to invest?

We suggest following criteria:

Low service cost (it should be under 5% of ARPU)

High service relevance (relevant for over 20% of subscribers)

Minimum externalities (doesn’t have networking effects)

Using these criteria, Cloud Device Backup and Sync service is an great candidate.

In case you haven’t heard yet, white-label Younited Personal Cloud service by FSecure is being sunset on Oct 1st 2015. 

If you are a Telco using Younited as a platform for delivering Personal Cloud service - you have a decision to make. So what are your options?

1) Migrate to Synchronoss Personal Cloud solution

2) Migrate to Cloudike (or other vendor of choice)

While the first option it probably the least painful, it exposes customers to pricing leverage from Synchronoss. Would they use this leverage? It’s anybody’s guess. We can only presume they would seek to get a decent ROI on those $60M they paid for Younited.

The second option is harder, but we have a bit of good news there. Cloudike team have developed a migration tool that enables migration of subscriber data from Younited to Cloudike-based service.

Korea’s second largest telecom operator, KT, partnered with Cloudike to launch a file-sync solution for SMBs via its Ucloud business platform (ucloudbiz.olleh.com).

Taking advantage of KT’s strong cloud infrastructure, we can provide local startups and SMBs with a cloud-based file sharing and storage service that is affordable, and over 10 times faster than Dropbox or Google Drive.

KT company spokesperson said “Our new partnership with ASD Korea (Cloudike company) is beneficial for both KT and its partners. It will enable us to focus on developing infrastructure and hardware, which involves large scale investment and heavy expenditure, while local startups and SMBs concentrate on developing software, which requires leniency and creativity”

About KT - KT Corporation is a South Korean integrated wired/wireless telecommunication service provider. KT focuses on information and communications business, and it has the largest portion of the South Korean local telephone, high-speed Internet and IPTV market. Originally founded in 1981 as a public corporation, KT actively led Korea's transition to the information era and played a key role in promoting the growth of Korea into a globally recognized IT superpower.

We are all excited by the announcement of Google Photos, the free unlimited storage for all your photos and videos. Does that sound too good to be true? 

Well, similar quasi-unlimited storage has been available for a while from Yahoo’s Flickr, which offers 1TB of free storage for your photos and videos.

The catch 22 in such services is that you loose control of the quality of your photos and videos. In other words, Google can (and will) adjust the quality settings for your photos at any time to optimize its storage costs. Basically, product managers would have certain target of storage utilization per user, and if that target is overshot - quality will be adjusted downwards.

So, one may ask, by how much does Google Photos reduce quality now? 

We’ve tested for this using photos and videos generated by Nexus 5 smartphone, and here’s our findings:

Photos (8MP): 60% of additional compression (only 40% of bits remain) Videos (720p): 90% of additional compression (only 10% of bits remain)

Overall, it’s clear that video quality was impacted the most, while photos also lost more that half of their bits. And that may change over time for worse (or for better?).