Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
Managed services have always been a key element of the telecom operator portfolio – at least one sure-shot means which keeps them from becoming dumb pipes.
For AT&T, wireless data/ managed services account for close to 25% of total revenues (2009). Verizon had initiated their focus on managed services a while back and it was further reinforced by their acquisition of Cybertrust in 2007.
Closer home, we have BT Global Services which provides converged and managed IT infrastructure – a combination of network, IT and professional services. France Telecom has Orange Business Services acquired from SITA in 2005. They currently provide managed WAN, LAN, security, video and mobility services.
All these services entail multiple data-centres which act as central network monitoring and management centres. In most cases this also permits the operators to include collocation services for clients looking at outsourcing their complete network and IT requirements.
Hence it came as a big surprise that Vodafone has outsourced the hosting and support for its m-Pesa service – it’s not being maintained in-house, or with another telco but Rackspace Hosting. While Vodafone is not a wireline operator, my assumption would have been that they would host client service applications in-house. After all, it is very much like the hosting services for the back-end of Vodafone 360 (which we will comment on another time). And they do have three of their own data centers in Italy, Ireland and Germany (maybe more – Turkey if I recollect was flooded a while back).
To the uninitiated, M-Pesa is a mobile payment solution to complete simple financial transactions through the mobile phone. The service is aimed at users who do not have a bank account or else do not have sufficient funds to justify an account. The service has seen very strong pick-up in Kenya and Tanzania and has been rolled out to various other parts of Africa and other emerging markets as well. If news reports are to be believed the service currently has close to 16 million customers worldwide.
It really is a big kudos to Rackspace.
The firm will be utilising satellite streaming technology to send and receive real time transaction data between users and the hosted servers. The sizing and clustering of the application and web servers enables them to handle close to three million transactions per day.
A little trivia on Rackspace – it’s a NYSE listed firm based in Texas. The firm received funding from Norwest Venture Partners and Sequoia Capital in 2000 and then listed in 2008. The IPO wasn’t too well received and lost almost 20% in value after the listing. However that can be blamed on the market environment in 2008. The stock is almost 150% up since those dark days.
All in all, it is an interesting trend. Perhaps we’ll see MVNOs and their likes co-locating their billing systems in independent data centres as well. Further with the anticipated pick up in cloud services this is certainly a company to keep an eye on.
