Jamcracker: Cloud Service Customers More Likely to Renew Broadband Contracts

SANTA CLARA, CA - Business acceptance of cloud computing is growing, presenting telcos with opportunities to generate new revenues and reduce churn.

The first annual report on cloud adoption and usage from Jamcracker, the operator of a cloud services brokerage, tracks usage in the Jamcracker Services Delivery Network (JSDN), which includes dozens of service providers and distributors, more than 100 cloud providers and hundreds of thousands of businesses. Jamcracker found that e-mail and collaboration services grew faster than any other categories of cloud-based services from 2009 to 2010 due to growing market awareness, aggressive price moves by Google and Microsoft and a trend by businesses of all sizes to migrate their e-mail from on-premises to hosted solutions.

JSDN's sell-through revenues increased by an average of 12.5 percent month over month during the second half of 2010. Jamcracker attributes this rapid growth to businesses' increasing awareness and acceptance of cloud services as well as to vendors' focus on marketing cloud services to counter a decline in margins from traditional technology offerings.

According to Jamcracker, service providers have been first to market with the cloud service brokerage model, with a heavy emphasis on security, e-mail and collaboration services. Small and midsized businesses tend to view these services as natural extensions of telcos' core offerings and therefore accept them as trusted providers.

In addition to driving a sharp rise in net new revenues, telcos are seeing reduced churn for core services as well as increased customer lifetime profitability. As one example, Telstra recently reported that its cloud service customers are 62 percent more likely to renew their broadband contracts.

"We are seeing an increasing focus on CSB [cloud service brokerage] as not only a technology platform, but a means to augment company business models towards rapidly growing subscription-based revenue streams," says Steve Crawford, vice president of marketing and business development at Jamcracker. "This coming year, we expect to see a continued and increased use of the CSB model into mainstream service providers, traditional distributors and enterprise and governments looking to offer more services to their end users."

Download the full report here.