More Other Countries IP Communications Stories

Latin American holds great opportunity for telcos to enter the small to midsize enterprise (SME) cloud market. However, they need to recognize four trends that are likely to evolve over the next five years, according to a new report from Pyramid Research.  

The Latin America microenterprise and SME cloud services market is estimated to reach $1.9 billion in 2012. While this segment represents 42 percent of the overall market in U.S. dollar terms, it accounts for 99 of every 100 businesses in Latin America. The market is forecast to grow at a CAGR of 38 percent in the 2011-2017 period, to reach $12.7 billion by 2017, according to the report, “How Latin American Telcos Are Tackling the SME Cloud Opportunity.”

Traditionally, telcos have dominated the SME market for telecom, as opposed to the IT and OTT service providers. When it comes to cloud services, telcos are in a vulnerable position due to strong competition from well-established IT service providers, OTTs and independent software vendors (ISVs), according to Daniel Ramos, senior consultant at Pyramid Research.  

“Traditionally, telcos have dominated the SME market for telecom services, as opposed to the cloud service providers,” Ramos said. “However, telcos are in a vulnerable position due to strong competition from well-established cloud service providers and moving forward telcos and cloud service providers are expected to coexist.”  

Pyramid Research predicts that the Latin American SME cloud services market will consolidate and strategic alliances between market players will continue to emerge, while telcos will start to launch cloud services divisions. SME cloud services will converge and evolve from a horizontal to a vertical focus, while the cloud aggregator/broker model will become mainstream in Latin America, Ramos added. 

The report identified four market trends that are likely to evolve in the next five years, which are the following:

•   Telcos and cloud service provides (IT service providers, OTT providers, independent software vendors and cloud aggregators/brokers) will coexist.
•  The Latin American SME cloud services market will consolidate. Strategic alliances between market players will continue emerge, and telcos will spin out their cloud services divisions.
• SME cloud services will converge and will evolve from a horizontal to a vertical focus.
• The cloud aggregator/broker model will become mainstream in Latin America.