In this article on the Register, someone is repeating a press release without giving it too much thought Telstra throws AU$800m at clouds • The Register
Telstra is spending over AU$800 million in cloud computing over the next five years to meet emerging demand in the enterprise space. The carrier claims use of its infrastructure cloud-based services has increased by 50 percent this year, while take-up of voice and video services hosted in the cloud is up 80 percent, delivering more than 100,000 IP telephony services.
So, $800 million you reckon. Thats sounds like rather a lot so I lets look into it. For background, Telstra is the incumbent service provider in Australia with more than 60% of the total marketshare with revenue1 of around AUD$25 billion per year.
- Lets assume that they allocated $25 million as the project budget in the FIRST year.
- Lets project 100% growth every year for the next five years ( optimistic, they aren’t getting that growth now – hosted voice and video is growing at 80% per annum after years of market development)
|Year 1||Year 2||Year 3||Year 4||Year 5||Total 5 Year Spend|
Oh, wow. Look at that, the power compound interest — a little bit of rounding and you have $800 million over five years from just $25 million up front.
Anyone want to take a bet that 100% growth every year for five years is grossly unlikely ? Do you think that allocating 0.01% of their gross annual revenue to a “cloud” project is big money ? Then consider that their broadband rollout projects is measured in the billions, every year.
Therefore, not such a big cloud project at all. Not even really committed, just pocket money for a big company where some executive has convinced the business it’s the “next big thing”. Compare this with the money spent at Amazon / Google / Facebook for a single data center. Telstra is doing cloud here but it’s just some servers in a few racks of their existing data centers. Big deal.