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ABS FINAL REPORT
Co-opetition in the Cloud Computing
Industry
Singtel and Globe Telecom
By: Candelaria, Daruka, Dey, Jha, Srinivasan
2
CONTENTS
Topic Page #
Executive summary 3
I. ASEAN 2015 Vision for ICT and Cloud Computing 4
II. Cloud Computing and Background 4
What is Cloud Computing? 4
Cloud Computing – Its significance to the Telecom Industry 4
Cloud Computing in ASEAN 5
III. Scope of the Paper 5
IV. Cloud Computing Industry 6
Singapore 6
Philippines 7
Singtel 7
Globe Telecom 7
V. Environmental Analysis 8
Pestle Analysis 8
SWOT and Strategic Options 9
Porter’s five forces for Cloud Computing Industry 10
VI. Co-opetition 11
Value Net 11
Application of Parts 12
Circumventing the Traps of PARTS 13
V. Conclusion 13
Exhibits 14-20
3
Executive Summary
The ASEAN 2015 ICT Master Plan envisions ASEAN to move towards a transformational and
empowering ICT which would help create an inclusive, vibrant and an integrated ASEAN. The
paper looks at the growth and usage of cloud computing as a mode to achieve the ICT vision for
ASEAN 2015. Cloud computing is a revolutionary ICT technology which helps businesses in
bringing down their operational costs significantly. It works on the concept of economies of
scale by integrating the infrastructure and services for a lot of companies in one place. One of the
industries which is gradually moving to become a provider of cloud computing services is the
telecom sector. The telecom sector sees cloud computing as another revenue generating
opportunity beyond its traditional revenue making model which includes providing mobile, fixed
and broadband services.
The paper speaks about the creation of a co-opetition strategy between two companies namely
Globe telecom (second largest telecom player in Philippines) and its principal Singtel (leading
Telecom Company based in Singapore). The strategy is such that the eventual consequences
benefit both Globe and Singtel in increasing their respective customer base (thus revenues) as
well as global footprints. In the game, Globe and Singtel both cooperate first to set up IT
infrastructure in Philippines and later both compete as the cloud services offered by both
companies will help them capture a bigger customer base.
The paper peeks into the environmental analysis of the Singapore and Philippines cloud industry.
A Pestle analysis for the Philippines helps us assess the readiness of the market for new and
advanced cloud based solutions. The SWOT framework is further used to arrive at the strategic
options for both Globe and Singtel. Finally, a porter’s five forces framework for the cloud
computing industry helps us assess the attractiveness of the industry.
The paper also analyse the value net of Globe and do a PARTS analysis to see if the strategy
adheres to the classic game theory approach.
If the strategy works between Singapore and Philippines, it is suggested that a similar strategy
can be implemented across ASEAN. As a result, not only will the telcos in ASEAN get a larger
market share of the bigger cloud customer base, but also the enterprises using these cloud
services across ASEAN will be able to bring down their costs of operations. This will help the
enterprises to focus on their core competencies rather than focus on IT infrastructure
maintenance. The enterprises will, therefore, become more efficient in their area of operations. If
we look at the bigger picture, ASEAN will be thus be able to attract more international
enterprises to setup business in the region which in turn will generate added value for the
economies of various member states of ASEAN.
4
I. ASEAN 2015 Vision for ICT and Cloud Computing
ICT or Information and communications technology is one of the key elements in improving and
enhancing the ASEAN connectivity. ASEAN connectivity is an essential in achieving a single
and unified ASEAN Community through an ASEAN Political-Security Community, ASEAN
Economic Community and the ASEAN Socio-Cultural Community. In a nutshell, the ASEAN
connectivity focuses on taking steps to boost the physical connectivity, the institutional
connectivity and people-to-people connectivity. ICT, along with energy and transport make up
the physical connectivity aspect of the complete ASEAN connectivity.1
ICT infrastructure plays a role in facilitating trade and investments, connecting people,
supporting delivery of services and reducing cost of business and trade-related transactions. ICT
infrastructure largely includes fixed, mobile and satellite communication networks and the
internet along with the software required to develop and operate these systems.
The vision of ASEAN in ICT synergizes with the bigger vision of unifying the ASEAN
community where one business operating in one part of ASEAN can conveniently service other
parties in other parts of ASEAN. The physical distances should zero out with the help of latest
technology and swift information flow. To realize this vision, it is required from the member
states of ASEAN to cooperate with one another in order to bridge the digital divide that exists
now between countries in ASEAN.
Given the vision to build a strong and reliable ICT infrastructure, an area of focus for ASEAN
would also be to build capabilities to support cloud computing. Cloud computing is a growing
form of computing which enables organizations to adopt ICT infrastructure at low costs.
Adoption of cloud computing still remains an area of potential growth in ASEAN with respect to
its 2015 ICT vision.
II. Cloud Computing and Background
What is Cloud Computing?
Cloud computing is internet-based computing, whereby shared resources, software, and
information are provided to computers and other devices on demand, like the electricity grid. It
offers the ability to run programs on many connected computers and systems at the same time.
Cloud computing has an advantage of usage where there is economies of scale. This is to say that
the cost of moving the resources to cloud in an enterprise would reduce with the increase in the
number of users who would access cloud. It is also more convenient to use cloud when the
system is accessed from different regions globally at different times as per demand. It greatly
helps companies avoid investing in depreciable assets such that it leads to lower a capex for the
business and more opex with the pay-as-you-use model. It thus, allows many companies to avoid
spending on upfront IT infrastructure costs and thus concentrate on their core competencies.2
Cloud Computing – Its significance to the Telecom Industry
1 Source: ASEAN Connectivity Master Plan, http://www.mfa.go.th/asean/contents/files/customize-20130130-
140932-379647.pdf 2 Source: Wikipedia, https://en.wikipedia.org/wiki/Cloud_computing
5
Cloud computing is changing the face of the telecom industry by restructuring the industry’s
value chain, redefining the telecom operating model and leveraging strategic alliances between
the telecom and IT firms (cloud service providers). Three ways that the telecom operators are
slowly aligning themselves in the cloud value chain are by managing cloud connectivity,
delivering cloud-based capabilities, and by leveraging network assets to enhance cloud
offerings.3
The telecom operators act either as a user or as a provider of cloud services or does both of this
(Exhibit 1). By being a user of cloud services the operators are able to save costs, on the other by
being a provider of cloud services the telecom operators create a new revenue stream for
themselves. The operators who act as users of cloud services have been able to transfer selected
functions of their business to cloud like many other organizations have done. Some operators
build their own cloud infrastructure, thus becoming their own customers. They can further
harness on this capability by selling the in-build cloud services to other operators.
To conclude all the above, not only are telecom operators reducing their own cost of operations
by using cloud solution but also offering cloud services to businesses and enterprises thus adding
a new revenue stream to their portfolio. The telecom industry views the opportunity of offering
cloud services as an avenue to diversify its services beyond the traditional telecom services of
offering mobile, fixed-line and broadband services. Given that many markets are globally
reaching saturation in the mobile and fixed-line usage, telecom operators are finding their way to
explore other options of revenue generation. As businesses and countries become more aware of
the benefits of cloud computing globally, telecom operators have a hope to cater to an all new
market by building cloud-based capabilities and fulfilling the unmet needs. According to a study
done in 2011 by Gartner, the cloud technology spending globally is forecasted to reach $207
billion by 2016 from $91 billion in 2011.4
Cloud Computing in ASEAN
Cloud computing is gaining increasing importance under ICT in ASEAN. It is being invariably
used across industries in the world to either reduce costs for some organizations or create
revenues for others. However, the adoption of cloud computing in businesses is still low in
ASEAN owing to the lack of knowledge about the technology and its use among the business
fraternity in ASEAN. Evident from the cloud readiness index (CRI) assessment released by Asia
Cloud Computing Association in 2012, Singapore ranks 4th
in CRI assessment while Malaysia,
Indonesia, Philippines, Vietnam and Thailand occupy the lower rungs in the Asian rankings.
Brunei, Laos, Cambodia and Myanmar do not yet appear in the list. CRI assessment is done on
the basis of information regulations, information infrastructure, and business & government
environment in the countries in Asia.
III. Scope of the paper
A recent concept that has crept into the telecom industry is that of a federated cloud network. A
federated cloud is the deployment and management of several internal and external cloud
3 Source: Ericsson documentation on Telecom cloud opportunity,
http://www.ericsson.com/res/site_AU/docs/2012/ericsson_telecom_cloud_discussion_paper.pdf 4 Source: http://www.gmanetwork.com/news/story/269679/scitech/technology/cloud-technology-improves-phl-
businesses-gartner
6
services in order to match business needs. Singtel lately implemented a federated cloud network
across three countries: Singapore, Hong Kong and Australia such that an enterprise can keep
operating with the same operator’s cloud services seamlessly irrespective of the country the
enterprise operates in. Singtel, a telecom giant of Singapore, has left its footprints in the whole
Asia Pacific region by setting up data centres in all the three countries and thus becoming a
provider of federated cloud network and the enterprise-level services that it is offering over it.
A lot of businesses have started viewing ASEAN as a single bloc to spread their wings into. For
such enterprises to seamlessly carry out business across ASEAN, one of the key factors would be
ease of using the same computing services irrespective of the physical location. This would aid
in significantly adding value for these businesses.
In this paper, we would consider Singtel taking an initiative in setting up a federated cloud
network in other ASEAN member nations just like it did the in the Asia Pacific. As the scope of
this paper, we will study the environment in the telecom sector in Singapore and Philippines in
an attempt to begin a federated cloud network across these two countries first. Such a model
could hopefully be replicated to other ASEAN countries later with Singtel acting as a key player.
Given that Singtel has 47.34% of stakes in Globe Telecom, Philippines, we feel that it would be
easier for Singtel to work with Globe and set up the needed infrastructure for a federated cloud
between Singapore and Philippines. We will do a brief analysis of the scenario of the companies
and the industries in these two countries and the possible outcomes of such an application of co-
opetition.
IV. Cloud Computing Industry
Singapore
Singapore ranked 2nd
in international connectivity and 4th
in broadband quality as per the study
by Asia Cloud Computing Association (ACCA) in 2012. The adoption of SaaS5 is among
Singaporean businesses has grown at a CAGR of 20% over 2012-2015. Singapore topped the
cloud readiness index6 in e-government and ICT prioritization, and in IP protection, according to
a white paper released by ACCA. Singapore now hosts more than 10 cloud data centres of global
cloud service providers. The development of major information communication infrastructure
such as the Next Generation Nationwide Broadband Network, Singapore Internet Exchange and
Data Centre Park, provides a conducive environment for nurturing a vibrant cloud computing
ecosystem in Singapore.7 Infrastructure development has long being viewed as an enabler of the
knowledge economy that Singapore aimed to become.
Philippines
According to the 2012 study by ACCA, the Philippines remain at the lower tier of the cloud
readiness index. It ranks low in data privacy, IP protection and broadband quality. There is a
5 SaaS: Software as a service, sometimes referred to as "on-demand software" supplied by ISVs or "Application-
Service-Providers" (ASPs), is a software delivery model in which software and associated data are
centrally hosted on the cloud. 6 Cloud Readiness Index: The Index has been designed by ACCA to track the development of the necessary
infrastructure and enabling environment for cloud computing across leading Asian economies.
7 Source: http://news.idg.no/cw/art.cfm?id=305490CE-94AA-5121-92D0514D585FB30F
7
clear indication that the intellectual property protection regulations need to be strengthened and
treated with a high priority to boost confidence of the cloud service providers. Emerging
markets, including Philippines, will show the fastest growth in the public IT service sector.
According to International Data Corporation (IDC), by 2016 the collective share of the emerging
markets including Philippines will nearly double, accounting for nearly 30% of the new public
IT cloud services spending growth.8
Singapore Telecommunications Ltd. (Singtel)
Singtel is Asia’s leading communications group providing a wide variety of multimedia and ICT
solutions including voice, data and video services over fixed and wireless platforms.9 Singapore
with the help of its excellent infrastructure has managed to build a competitive telecoms market.
Headquartered in Singapore, Singtel’s main operations are in Singapore and Australia. In
Australia, Singtel operates with its local arm there called Optus. Singtel has been operating for
about 130 years and as of 2013, the group stand to server around 468 million people and employs
around 23,000 staff worldwide. Singtel has strategic investments in five regional mobile
operators: Telkomsel (Indonesia), Globe Telecom (the Philippines), Advanced Info Service
(Thailand) and PBTL (Bangladesh). The Group also has investments in Bharti Airtel (India),
which has significant presence in Bangladesh, Sri Lanka and Africa.
Singtel provides a whole suite of applications under cloud based application-as-a-service
category. It makes offerings under infrastructure-as-a-service as well as security-as-a-service.
Singtel’s recent initiative towards cloud adoption has been its expansion into the private and
hybrid cloud offerings. In March 2011, Singtel with the help of its cloud software provider,
VMWare, brought forward the hybrid cloud offering of PowerOn Compute. This software allows
companies to expand their resources on their private cloud infrastructure into Singtel’s public
cloud.
Globe Telecom
Ayala10
-owned Globe Telecom is 2nd
largest telco in the Philippines with close to a 34% market
share11
following PLDT (and its subsidiaries). Globe has been increasing spending on improving
network quality by making international tie-ups and upgrading the current technology. Globe
supports 2G, 3G, 4G and WiMAX services in the region. Singtel with a major control has about
47% stakes12
in Globe Telecom thus putting Globe at an advantage in technology upgrading with
the support of its principal. Globe is already into the business of offering cloud services to large
and small & medium enterprises in the form of infrastructure, storage, backup and computing
using cloud based solutions.
8 Source: www.bworldonline.com%2Fcontent.php%3Fsection%3DBeyond%26title%3DSMEs-and-the-Public-
Cloud-%26id%3D66926&h=4AQFI_4uZ 9 Singtel company profile from their website: http://info.singtel.com/about-us/company-profile
10 Ayala Corp. is a holding company for the diversified interests of the Ayala Group. Founded in the Philippines by
the Spanish and German Ayala, Roxas, and Zobel families during colonial rule, it is the country's oldest and
largest conglomerate. 11
32% market share for Globe Telecom in 2011; it rose by 2.2% in the following years. 12
Source: http://www.asiaone.com/News/The%2BBusiness%2BTimes/Story/A1Story20080628-73448.html
8
V. Environmental Analysis
Pestle Analysis
Political: Department of Science and Technology (DOST) agencies, the Information and
Communications Technology Office (DOST-ICTO) and the Advanced Science and Technology
Institute (DOST-ASTI) are encouraging the government of Philippines to embrace cloud
computing instead of the traditional IT system. This will be called GovCloud. Whenever
GovCloud is implemented, it is hoped that it will provide cost savings, better agility,
standardization of the IT system, and greener ICT and reduced risk.
Economic: One of the major advantages of cloud computing is the reduced capex for businesses.
Thus in a given period of time cloud based system reduce costs to much lower levels compared
to traditional IT systems.
A factor which may affect the growth and adoption of cloud computing in an economy is the
growth of economic GDP. In Philippines, economy is growing at a GDP growth rate of 7.8%13
.
Social: Growth in internet and social networking usage amongst the people is a big factor
fuelling to the increased adoption of cloud solutions.
The social networking penetration in Philippines has reached a whopping 95%.14
This supports
the fact that the social factors would be in favour of the adoption of cloud computing in the
Philippines.
Technological: With an increasing focus on improving bandwidth capabilities by the leading
telecom operators in the Philippines, the ease of adoption of cloud computing will increase. One
of the technological criteria is high quality bandwidth for usage of cloud services. The cloud
providers need to set up data servers to maintain the cloud data. With the increasing entrance of
international cloud service providers, the technology, infrastructure and know-how is easily
available in the Philippines.
Legal: The factors that need to be considered for cloud adoption from legal view point are: data
protection, software licensing, open source use and liability. The Philippines is still faces some
issues on the data protection and data security aspects.
Environmental: Usage of cloud computing automatically reduces the energy consumption. The
introduction of green systems has further helped organizations in benefiting from much reduced
costs of power consumption to operate the servers and systems.
The environmental analysis of Philippines suggests that apart from the data security issues
around adoption or acceptance of cloud computing, the other aspects including economic,
political, social, technological and environmental generally favour the growth of cloud
computing industry in the Philippines.
13
Source: http://www.nscb.gov.ph/sna/2013/1st2013/2013qpr1.asp 14
Source: http://asiancorrespondent.com/54475/philippines-named-the-social-networking-capital-of-the-world-
indonesia-malaysia-amongst-top-10/
9
SWOT Analysis and Strategic Options
The internal (strengths and weaknesses) analysis and external (opportunities and threats) analysis
for Singtel was performed. The internal analysis has been done based on the company and its
operations. External analysis has been done based on the Competitiveness Roadmap for 2013-
205015
. The strengths and weaknesses were then combines and the strategic options for each of
the companies were arrived at.
Singtel is the leading telecom operator in Singapore offering mobile, fixed and broadband
services. They have a wide reach in terms of customers in Singapore. They have an extensive
infrastructure to cater to their customers across Singapore and are able to operate on economies
of scale due to a high subscription. Owing to a small Singaporean population, Singtel has stakes
in various other Asian telecos. In terms of cloud computing, Singtel is a leader in Asian as it has
been able to remain ahead of the others in terms of technology, strong IT partners and a presence
in other countries including some countries in Asia and Australia. Nevertheless, a slowdown in
the Asian economy can affect Singtel as it holds high stakes in the Asian telcos. If these telcos
are affected adversely during a crisis, so will Singtel be under the circumstances. An increasing
concern for Singtel is also that the traditional telecom market in Singapore is slowly getting
saturated. Singtel needs to build newer capabilities to sustain its positioning in Singapore.
Globe is the second largest telco in Philippines after PLDT which also offers fixed, mobile and
broadband services. It has an extensive infrastructure in the Philippines and to add to its strengths
it has strong principals or stakeholders like Singtel to bolster its growth. However, Globe is
relatively a laggard in adoption of latest technologies to the extent that it introduced cloud
solutions about a year after its competitor, PLDT, introduced cloud solutions in the Philippines
market.
There are various opportunities for players like Singtel and Globe given that there are a growing
number of SMEs in ASEAN which creates a big market demand for cloud solutions. ASEAN is
moving towards knowledge sharing rather and more open systems which are an indication of
collaborations between players of a given industry in ASEAN. Since remoteness is becoming
irrelevant with technical advancements, people are becoming used to virtual systems and
technology like the internet. A big threat, however, is also that there would be more players now
in the telecom industry vying for a larger pie in ASEAN. For example, telco of Singapore could
compete with telco of Philippines.
Below are summed the strategic options for Singtel from the SWOT analysis:
Singtel should share its cloud best practices that it has developed over a period now, with
other regions in ASEAN. ASEAN is a good market for cloud service providers given the
growing number of SMEs operating across ASEAN. It will be a good chance for Singtel to
expand its footprint with increasing customers beyond its current customer base.
Singtel can hope to balance out its risks across its subsidiaries in case one region is affected
by economic crisis. Diversification by expanding to different regions can reduce risk to
15
The competitiveness roadmap published by IMD; source:
http://www.imd.org/uupload/imd.website/wcc/Roadmap.pdf
10
Singtel in terms of falling sales and profits in case one of its investment regions is affected by
an unseen crisis.
As an additional revenue stream, Singtel can provide cloud computing solutions to anyone
irrespective of their location.
Singtel should focus on getting the first mover advantage in the newer and unexplored
markets with its cloud capabilities hence making good for any lost market share elsewhere.
Focus on offering cloud services and expand into more regions to diversify risk of losing
market share in one.
Below are summed all possible strategic options for Globe from the SWOT analysis:
Globe can offer cloud services to their existing customers using SingTel’s infrastructure and
knowledge base
Develop and improve own cloud services capability and infrastructure through best practices
adopted from other ASEAN ICT firms
Use SingTel’s infrastructure and knowledge base to update own capability in offering cloud
services, thereby minimizing the threat of foreign firms taking Globe’s market share in cloud
computing
Discontinue offering cloud services; focus on traditional offerings of fixed line, mobile and
broadband
Embark on joint ventures with more foreign partners to offer cloud services in the PH
Porter’s five Forces for the Cloud Computing Industry
The cloud market players (sellers of cloud services) include all cloud-solution providers
including IBM, SAP, Microsoft, Google and other big ICT giants. However, because of low
product differentiation and almost the same cost structure offered by these companies the market
is very competitive.
The threat from new entrant is considered high overall. In SaaS market, the threat of new
entrants is high because of the requirement of low initial investment, low time to market and low
exit barrier. In PaaS16
market, presence of industry giants such as Google and Amazon creates a
high barrier to entry which can be reduced by product differentiation and innovation. In IaaS17
market, threat of new entrants has been low because of the requirement of high initial investment
and presence of high risk.
The threat from substitutes is low for the cloud computing industry since the technology itself
is at the stage of early adopters in the technology adoption life cycle (Exhibit 4). The other
substitutes for cloud computing today could be open source computing or shared server hosting
or dedicated server hosting.
The bargaining power of buyers would be rated generally medium (between low and high).
Based on whether the buyer avails cloud services in the form of IaaS, PaaS or SaaS, the
16
PaaS: Platform as a service (PaaS) is a category of cloud computing services that provides a computing
platform and a solution stack as a service (Source: Wikipedia) 17
IaaS: Infrastructure as a service (IaaS) is a category of cloud computing services that provides a virtual servers
and storage anytime.
11
bargaining power of the buyer may vary depending on how big are the switching costs to move
from one service provider to another. In SaaS and IaaS the bargaining power of buyer may be
high because of low switching costs however in PaaS the bargaining power is consider low
because of high switching costs.
The bargaining power of suppliers would be considered low. The suppliers of the cloud
computing players would be the hardware and software suppliers who furnish the needs of the
cloud service providers in order for them to serve their customers. The bargaining power of
suppliers is low since switching costs to move from one cloud provider to another is high.
Looking at all the above factors it can be concluded that the cloud computing industry is quite
attractive. The demand is still growing given that the technology is still in its nascent stages of
development. With the further innovation and R&D there could be scope of product
differentiation and hence more scope for innovative cloud providers.
VI. Co-opetition
Co-opetition is a form of strategy where companies cooperate yet compete to get a bigger market
share. At the end of the game, total value of the players’ gains must be more than the total value
with which they entered the game.
The co-opetition strategy that we are considering intends to benefit both Singtel and Globe after
they practise co-opetition. Singtel should consider investing in the cloud infrastructure and
technical know-how of Globe Telecom. Given that Singtel is already a pioneer in building a
federated cloud network, they should consider doing the same in ASEAN. They can begin doing
this from Philippines by first setting up data centre in the Philippines for the federated cloud
infrastructure. Globe is a partly-owned subsidiary of Singtel. Singtel can, therefore, get Globe
Telecom to cooperate and help set up the needed infrastructure in Philippines. The idea of setting
up data centre locally in a region is to improve the latency period for accessing services in and
around that region. If this happens, Singtel will get to increase its cloud service footprint in
Philippines as well in addition to the other regions in close proximity to Philippines. Singtel
customers can use the cloud services offered by Singtel seamlessly at the same latency rate in
any of the countries i.e. Singapore or the Philippines. Globe will benefit since it will get boost
with new technical know-how and improved technology and infrastructure. Globe being a part of
the federated network of Singtel will be able to attract customers from even outside Philippines.
See Exhibit 5 for a summary of this co-opetition strategy.
Value Net
Globe’s value net consists of its customers, substitutors, complementors and suppliers. Before
we understand the game further is important to understand the various players in the game. In
this case, the strategy is to convert one of the substitutors to become a part of the game such that
it works in favour of Globe Telecom.
The customers of Globe Telecom in the cloud computing space are the SMEs and the large
enterprises. The complementors who add value to the services offered by Globe are the internet
service providers. The faster the speed of the network, more effective the cloud solutions offered
by Globe become. Substitutors from the point of view of Globe would be big multinational firms
12
like Microsoft (Azure), Amazon (EC2), Singtel (PowerON ezCompute) and PLDT Cloud.
Suppliers from Globe’s point of view are the software and the hardware capability providers.
The software suppliers would count in VMWare and Microsoft and the hardware suppliers
include players like IBM and Cisco. Refer exhibit 6 for a brief overview of Globe’s value net.
Application of PARTS
If we want to change the game or maybe change the strategy in this case, we may have to change
the below elements.
1. Changing players: Globe, by bringing in Singtel into the cloud computing market in
Philippines, will manage to create economies of scale thereby bringing down the cost of
infrastructure for them and thereby offer cheaper solutions to the customers. It will create
a market for itself internationally by letting one of its substitutors i.e. Singtel to take a
prime role in bringing a change to the game. As a result of the changing game, Singtel
would become a complementor (adding value to Globe’s position) and a supplier
(provide technical know-how and possibly human resource such as managers) to Globe
Telecom.
2. Changing added value: As a result of collaboration with Singtel, Globe will be able to
introduce more advanced cloud products in the cloud market in Philippines. This will aid
in reducing the cloud market share of other cloud telecom providers like PLDT.
Simultaneouly, Globe will raise its own value as it would get access to superior
technology and will find a market even outside Philippines.
3. Changing rules of the game: Singtel new technology and Globe’s current cloud
capability will help reach economies of scale and thus both of the players will be able to
offer cheaper solutions than other competitors such as Amazon and Microsoft. Also,
Globe can set apart its target market to ASEAN unlike the other global players who are
looking at other markets like US, Europe and Australia as well. Globe can thus maintain
its position in spite of the tough competition by playing judo economics with the bigger
and older cloud service providers. If Globe remains small and focuses on the ASEAN
market, it could create custom solutions for the smaller customer base. However, for the
bigger players like Amazon and Microsoft, the solutions are more generic since they cater
to a larger global customer base.
4. Changing tactics: Singtel could have served the Philippines market through their data
centre in Singapore, without setting up data centre in the Philippines. However, it would
have not enabled them to provide low latency services that it can by locating data centres
in the Philippines. This is because proximity of data centres is an important factor in
enabling low latency of cloud services. Thus the strategy of Singtel setting up data centre
in the Philippines lifted the fog.
5. Changing scope: Given the nature of federated cloud network, not only will Globe be
able to capture a market within Philippines but can also expect to win customers outside
Philippines. For example in other countries where the federated cloud network exists
such as Hong Kong, Singapore and Australia, could act as alternative markets for Globe.
13
Thus Globe will change its scope from Philippines to many other countries given that
PLDT covers a lion’s share in cloud computing in Philippines with better and more
advanced technologies.
Circumventing the Traps of the PARTS Strategy
First mental trap is to think that you have to accept the game you find yourself in. In this
case Globe has been vying on the second position after PLDT in the cloud telco industry.
However, by cooperating with Singtel, Globe can change the current game and thus Globe can
become a game maker rather than remain as a game taker.
Next trap is to think that changing the game must come at the expense of another. In this
case, Globe cooperates with Singtel, even though there is a chance that Singtel might get
benefited from the whole arrangement. However, it is more important for Globe to see if they are
benefiting at the end and less important to keep the other player devoid of benefits.
Another trap is to believe that you have to find something to do that others can’t. In our
case of co-opetition, it is highly possible that another player could set up a similar federated
cloud network in the same region as Globe and Singtel. However, in spite of this it is in the
benefit of Globe to adopt the strategy to attain greater market share.
The fourth trap is failing to see the whole game. In the given case, after creating the value net,
we realized that Singtel PowerON ezCompute was actually a competitor or substitutors to
Globe’s cloud solutions. However, after looking at the whole game, it was possible to see how
the one can turn around the substitutor to a complementor or a supplier.
The fifth trap is failing to think methodically about changing the game. The game strategy
was developed using the PARTS framework. The approach was allocentric which would allow
more than just Globe to benefit from the strategy. The other beneficiaries here would be Singtel
and the other telcos in ASEAN who will be a part of the federated cloud network.
VII. Conclusion
The long-term vision of the strategy talked about is more than just setting up data centres in the
Philippines for Singtel. In the short term this would benefit Singtel and Globe. However, in the
longer term it is hoped that the strategy would be adopted by telcos throughout ASEAN. As a
result of this, not only will the telcos in ASEAN get a larger market share of the bigger cloud
customer base, but also the enterprises using these cloud services across ASEAN will be able to
bring down their costs of operations. This will help the enterprises to focus on their core
competencies rather than focus on IT infrastructure maintenance. The enterprises will, therefore,
become more efficient in their area of operations. If we look at the bigger picture, ASEAN will
be thus be able to attract more international enterprises to setup business in the region which in
turn will generate added value for the economies of various member states of ASEAN. In context
to the ASEAN ICT 2015 master plan (Exhibit 7), by laying stress on the foundations of human
capital development, infrastructure development and bridging the digital divide, and the pillar of
economic transformation, we would achieve the outcome of making ICT an engine of growth for
ASEAN countries and contribute towards the ASEAN integration.
14
Exhibit 1: A telecom company as a Cloud Provider and a Cloud User
Adopted from Ericsson Telecomm
Exhibit 2: Pestle Analysis of Philippines
Telecom Company
as a cloud user
Telecom Company
as a cloud provider
Using cloud for internal operations
Using and selling cloud services to others
Managing cloud connectivity
Delivering cloud capabilities
Enhancing cloud offerings
Technological
Enablers are maturing of
virtualization technology and
the development of universal
high-speed bandwidth
universal software
interoperability standards
Legal
Data protection, software
licensing, open source use and
liability
Environmental
Reduces energy consumption
Concept of green policy can
further work towards
environmental cause PESTLE
Political
DOST-agencies, DOST-ICTO
and DOST-ASTI are
encouraging government to use
cloud application (G-Cloud)
Economic
Economic-crisis prone businesses
find more value in cloud
Reduces heavy capex instead
generates opex based on usage
Social
Growing usage of internet and
networking sites plays
significance in adoption of cloud
technologies.
15
Exhibit 3: SWOT Analysis for Singapore Telecommunications (Singtel)
1. Leading domestic fixed, mobile and
broadband operator in Singapore
2. Wide reach, extensive infrastructure
and economies of scale
3. Strong Asian coverage, has stakes in
other Asian Telcos
4. Developed range of cloud based
products in partnership with strong
IT companies providing cloud
solutions
1. Economic slowdown may
affect SingTel's overseas
Asian markets, which account
for two-thirds of group sales
and profit.
2. National telephony revenue are
declining as the number of local
fixed lines in service falls, a result
of the popularity of alternative
services such as VoIP and mobile
1. Emergence of a new middle class #20
Growing number of SME’s in the region –
ASEAN
2. Intellectual property vs. open
systems #27
ASEAN 2015 ICT vision: focus on a
culture of sharing information and best
practices
3. Remoteness becomes irrelevant (both
an opportunity and a threat) #42
Services can be offered to anyone with an
internet connection;
S4, S3, O1, O2, and O3: Singtel should
be able to share its cloud best practices
with other regions in ASEAN given the
growing number of SMEs operating
across ASEAN. It will be a good
chance for Singtel to expand its
footprint with increasing customers.
W1, O1, and O2: Singtel can hope to
balance out its sales across its
subsidiaries in case one region is
affected by economic crisis.
Diversification by expanding to
different regions can reduce risk of
economic crisis in one region.
W2, W3: As an additional revenue
stream, Singtel can provide CC
solutions to anyone irrespective of
their location.
1. Remoteness becomes irrelevant (both
an opportunity and a threat) #42
Other larger foreign telco/ICT service
providers can serve Singtel’s customers,
taking market share away from Singtel
S3, S2, and T1: Singtel should focus on
getting the first mover advantage in the
newer and unexplored markets with its
cloud capabilities hence making good
for any lost market share elsewhere.
W2, and T1: Focus on offering
cloud services and expand into more
regions to diversify risk of losing
market share in one.
OP
PO
RT
UN
ITIE
S
TH
RE
AT
S
STRENGTHS WEAKNESSES
16
Exhibit 4: SWOT Analysis for Globe Telecom Ltd.
1. Offers an integrated set
of services – fixed line,
mobile, and
internet/broadband
2. Second largest
Philippines telecoms
operator with wide reach,
extensive infrastructure
and economies of scale
3. Strong support from
principals (Ayala
Corporation and
SingTel), including
infrastructure, knowledge
and resource base
4. Slow adoption of
latest available
technologies
5. Young cloud
computing arm
(Globe Business);
introduced only in
2011
1. Emergence of a new middle class
(#20)
Growing number of SME’s in the
country and nurturing of entrepreneurs
2. Intellectual property vs. open
systems (#27)
ASEAN 2015 ICT vision: focus on a
culture of sharing information and best
practices
S1, S2, S3, O1 - Globe can offer
cloud services to their existing
customers using SingTel’s
infrastructure and knowledge base
W2, O2 – Develop and
improve own cloud services
capability and infrastructure
through best practices adopted
from other ASEAN ICT firms
1. Remoteness becomes irrelevant
(#42) Foreign telco / ICT service
providers can serve PH customers,
taking market share away from Globe
S3, T1 – Use SingTel’s
infrastructure and knowledge base
to update own capability in
offering cloud services, thereby
minimizing the threat of foreign
firms taking Globe’s market share
in cloud computing
W1, W2, T1 – Discontinue
offering cloud services; focus
on traditional offerings of
fixed line, mobile and
broadband
W1, W2, T1 – Embark on
joint ventures with more
foreign partners to offer cloud
services in the PH
OP
PO
RT
UN
ITIE
S
TH
RE
AT
S
STRENGTHS WEAKNESSES
17
Exhibit 3: Porter’s Five Forces for the Cloud Computing Industry
New Market Entrants
Geographical Factors
Entrant Strategy
Routes to market
Technology
Development
Substitutes
Trends
Legislative effects
Buyers
Buyer Size
Buyer Number
Product Service
Requirement
Suppliers
Level of Quality
Size of the process
Bidding capabilities
Cloud Market
Cost Structure
Product Service
Ranges
Differentiation/
Strategy
Number of Players
HIGH
HIGH
LOW
MEDIUM HIGH
HIGHLY ATTRACTIVE
18
Early Majorities
Early Adopters
Innovators
Exhibit 4: Technology adoption Life cycle of Cloud Computing
Adopted from an online tech blog
Exhibit 5: Co-opetition Strategy between Singtel and Globe
Growth
Time
Cloud computing
today
Globe Singtel
Singapore Philippines
Shares cloud infrastructure & know-how
Federated cloud network
Data Centres
Customer on the federated
cloud can choose to host
applications from either
location
Helps set up data
centre in PH
19
Exhibit 6: Value Net for Globe Telecom
Globe
Customers
-SMEs and large
enterprise
Substitutors
-Microsoft Azure
-Amazon EC2
-SingTel PowerON
ezCompute
Suppliers
-Software suppliers like
Microsoft, VmWare
-Hardware like IBM and
Cisco
Complementors
-Internet service
providers
20
Exhibit 7: ASEAN ICT 2015 Master Plan
1. Economic
Transformation - To promote trade,
investment and
entrepreneurship in the
ICT sector, and build an
ICT engine for sectorial
transformation
2. People Empowerment
& Engagement - To enhance the quality
of life through affordable
and equitable ICT
3. Innovation - To nurture a creative,
innovative and green ICT
sector
4. Infrastructure Development
- To provide the next generation infrastructure backbone and enabling policies and legislation
5. Human Capital Development - To develop a skillful ICT workforce and knowledgeable community
6. Bridging the Digital Divide - To elevate countries and people through ICT capabilities
FOUNDATIONS
PILLARS
KEY OUTCOME
• ICT as an engine of
growth for ASEAN
countries
• Recognition for
ASEAN as a global
ICT hub
• Enhanced quality of
life for peoples of
ASEAN
• Contribution towards
ASEAN integration
VISION Towards an empowering and transformational ICT: Creating an inclusive, vibrant, and
integrated ASEAN