Funambol claims that its OneMediaHub is the premier white label personal cloud offering. The primary market being addressed currently is the mobile carrier market. Funambol announced in January that they had signed up eight of the world’s largest mobile carriers, who serve a cumulative subscriber base of over 1 billion accounts.
In February Telefonica Digital, which has been using the Funambol cloud in Brazil, with its Vivo subsidiary, announced that it would extend its use across Europe and Latin America. Funambol’s other major customers include Orange, America Movil, Etisalat and others.
We spoke with Hal Steger, vice president for worldwide marketing and business development at Funambol. Steger states that there has been a dramatic change in carrier attitudes towards personal clouds in the last twelve months. A year ago, he points out, most carriers were willing to offer services from independent cloud providers, e.g., Dropbox. Since then, all of the major carriers have decided that it is important for them to offer their own personal cloud.
Exactly what brought about this change in carrier attitudes? Primarily, the carriers started feeling threatened by Google and various other OTT providers, who increasingly were becoming the repositories for user data and content.
The issue for carriers is exacerbated as they sell more types of mobile devices and also try to offer more value added services. Steger uses the example of a carrier offering home security and other services to consumers. He emphasizes that carriers have come to realize that they need to provide one place for the user to keep all of such information.
He cites a Pyramid Research survey that found that 35% of carriers have launched personal clouds; 35% will launch in 6-18 months; while of the remaining 30% – half are figuring out their personal cloud strategy and half have no plans.
He sums up, “One year ago – less than 10% of carriers had launched.”
Carriers have dual objectives:
1) They believe personal clouds will help reduce churn. From discussions with carriers and surveys, he believes that the consensus is that it could reduce churn by as much as 5-10%, which would be dramatically greater than other churn reduction measures, which are successful if they reduce churn buy a fraction of a percent. Verizon Wireless’ outstanding financial performance is materially due to their 1% churn rate. every fraction of a percent reduction is worth millions in bottom line performance to a large carrier.
2) Carriers are also trying to generate additional revenue.
Among the most interesting issues is the question of how carriers get users to actually use their personal clouds. After all, the area is crowded, with device maker clouds, most notably iCloud, what Steger characterizes as “ecosystem player clouds,” such as Google Drive and Microsoft OneDrive and well-known independent provider clouds, e.g., Dropbox, Box.
Funambol helps their carrier clients with user adoption programs. Among the most successful tactics have been: a) increased free storage (Orange, for example, increased its free storage allowance to 50GB from 5-15GB), and b) “zero rating,” i.e., foregoing any data charges when the user accesses their cloud. He says there are about 5-to-10 such techniques being tried.
The company has focused considerable attention on issues related to marketing of personal clouds. They point to iCloud as an example of what works. This includes mass market advertising (to create familiarity with the name), ads with examples of how to use the cloud, including features such as syncing.
Steger believes that other leading device makers will have difficulty emulating Apple’s iCloud success. He regards Apple as unique in its ability to integrate hardware and software and believes the other device majors, including Samsung, will wind up with a solution that divorces their cloud from specific device hardware.
The company currently claims over 50 million active users of its carrier personal clouds. Carrier clouds, the company believes, are also being helped by the NSA scandal, which has caused companies and users around the world to have second thoughts about having their data on Google’s servers.
Funambol has spent considerable time developing features to simplify access and management of user content in the cloud. It includes a mobile timeline app that organizes user content chronologically. It also puts content into streams and applies filters. For example, it uses photo recognition technology to allow a user to select photos that may contain a certain individual.
Regarding the “cloud of clouds,” Steger notes that content is becoming fragmented, raising issues as to how to track, manage and back it up. Personal clouds of carriers, for example, are constantly interacting with multiple sources of content, such as social networks. The need for companies to organize content from dispersed sources has also led the company into discussions with certain leading companies in the retail field. Funambol provides the agnostic solution for this fragmented heterogeneous landscape.
Funambol estimates the total personal cloud market is now over 1 billion users worldwide and could grow to 2 billion over two years. Among its 50 million users, about 5% are paid. The company generally gets an up front fee from carriers (typically a few hundred thousand dollars) and looks to get a few of pennies per month for non-paid users and up to 35% for paid users.
A key growth factor for the future, Steger believes, will be analytics, to develop insights from user content and behavior. This is an area that the carriers have not proven adept at addressing.
Funambol sees numerous opportunities to expand their product and market. Currently they are also marketing to leading cable companies, which have been expressing interest in a branded personal cloud. For the cablecos this would involve offering a single place for the user to store their videos and other information and be able to view it on a TV.
They are also considering extending their personal cloud offerings to the SMB market and to a family cloud type of offering.