We recently spoke with Hal Steger, VP of Global Marketing at Funambol, a leader in carrier personal clouds, and also a company targeted by a lawsuit by its larger competitor, Synchronoss.

Where is growth coming from in the carrier cloud market?
Steger, states, “Almost all growth is outside North America.”

Why is this so?
He cites several possible reasons. In some cases, carriers may have “captive audiences,” i.e., they may control both the landline and mobile markets. Also some may just be better at marketing the personal cloud service. Or their users may be less aware of alternative public cloud services, such as Dropbox and Google Drive. Another factor, however, is that carriers may have a good reputation for security – this is the anti-NSA overhang; carriers are viewed outside the U.S. as more trustworthy and many don’t use public cloud providers such as Amazon.

What are the key trends making personal clouds valuable to the users and how are carriers pursuing them?
Steger states that, “People’s ‘digital lives’ are spiraling out of control.” By this he means that they are beginning to collect information and their “stuff” in various repositories or vaults, i.e., clouds. Funambol has been offering a feature called “xCloud,” or “Cloud of Clouds” which facilitates bringing in items from various clouds and organizing them in an intuitive manner, e.g., photos, videos, etc. Some Tier 1 carriers, he points out, are seeking to augment the obvious types of items in personal clouds with other information, such as receipts, etickets, bank statements, input from wearables, etc.

How has the business model been evolving for Funambol in their dealings with carriers?
Funambol enters licenses with carriers. Sometimes they involve a lump sum payment, with unlimited use. Others may range up to 100% based on revenue sharing; where Funambol would recover their up front costs out of revenues and then get a continuing share.

What are the implications of the sharply declining cost of storage?
It reduces the carriers’ risks. Funambol doesn’t make money on storage – it is a pass-through item.

What is the monetization process of a typical user like?
After three years of a deployment it is probably about 5% who become paid users. This often happens as the customer uses multiple devices and the cloud therefore becomes more valuable to them.

How are free users treated?
Carriers want to pay little if anything to Funambol for free users. However, having a big base of free users enables carriers to make various offers to them.

What about the analytics regarding the usage patterns of the customers?
Funambol has been working with Capptain (owned by Microsoft) for about a year. They are able to capture usage of personal clouds by individuals, e.g., are they using it for photos, videos, etc. It allows them to track “retention” – how many customers continue to use the cloud. Also it can enable the carrier to give the users appropriate notifications and offers.

How is the OneBizHub product doing (the white label enterprise cloud solution that Funambol introduced in mid-2014)?
Steger reports that they have achieved three deployments to date (versus 40 deployments of the carrier cloud product, OneMediaHub). OneBizHub can be deployed by the carrier, or on the enterprise’s facilities. It is a very attractive product because the carriers can charge substantially higher rates than for consumer clouds, e.g., even as much as $10 per month per user.

How has the total user base grown?
It doubled in 2014, but they have not yet achieved 100 million registered users. About one-third are active users and that number is increasing by about 1% per month.

Is Funambol considering a verticalized approach to its offerings?
Not at this time.

How big is Funambol?
They have about 100 employees currently, about 60 in R&D (located in Italy), with most of the rest related to sales. The marketing staff numbers five.

Synchronoss has sued Funambol (alleging patent violations) – any comment?
No comment.

However, readers should note that Synchronoss has been an aggressive patent litigant. In the past four years it has sued, in addition to Funambol: Asurion, Egnyte, Carbonite, NewBay and F-Serve. Most notably: a) The NewBay suit filed in 2011 was followed by the purchase of NewBay by Synchronoss from Blackberry in 2012, the foundation for Synchronoss’s rapid growth in carrier personal clouds; b) The F-Secure suit filed in late 2013 was followed by the announcement in February 2014 that Synchronoss was buying the Younited carrier personal cloud business of F-Secure.

Is this a harbinger of events to follow?

Visit their website: www.funambol.com

Photo by Karlis Dambrans via Flickr