OVHcloud boss: European cloud providers need to stand up to the US hyperscalers
Michel Paulin says UK and European providers should get a bigger slice of global cloud spend, hopes for US-style public sector support
The CEO of Europe's leading cloud player, France's OVHcloud, says UK and European cloud providers should be more ambitious in taking more market spend away from US hyperscaler giants.
Michel Paulin gave his views on how the European cloud market is developing to CRN, after his group closed 2022 on a high.
The European cloud market earned €10.4bn in Q2 2022, growing more than five times its size from early 2017.
European service providers grew their cloud revenues by 167% over that same period, according to data from Synergy Research Group, however, none have come close to challenging the big US cloud providers for leadership of the European market which is dominated by Amazon, Microsoft and Google.
Paulin described this struggle for market share as an "endless debate" on why local European players cannot win against US hyperscalers.
He said the answer lies partially in the vision of some European players who want to "impose" their solutions on customers.
However, he believes what is more important to the market and what is most crucial for the customer is the freedom of choice.
"Not giving freedom of choice is not good for the market and of course not good for the customers in the end," he said.
"And why? Are we more stupid than the hyperscaler's engineers? I don't think so. I'm sure that in the UK, in France, Germany, we have excellent engineers able to propose alternative solutions.
"There are many start-ups, and in the UK you have a lot of very active start-ups. It's a shame that in the end, they're all bought by hyperscalers because they have more money than the local players."
The group boss continued to question why European players tend not to be at the top of the game when proposing innovative solutions, but asserted it is central to what he thinks should be done to boost European champions.
"The first thing is to have good innovative products. Good innovation is at the heart of what I think is absolutely mandatory," Paulin stated.
"However, if you look at what is going on in Korea, China or the US, they are massively helped by an ecosystem of what I will call ‘people work'".
He outlined how the US is aided massively by the public sector, with the government, CIA, FBI and NASA contributing huge amounts of money to emerging and existing providers.
In Europe, 80 per cent of public sector cloud orders go to US companies, Paulin added.
"I think we need to stop being naive. Not because our engineers are not as good, it's also because the federal government in the US, the Chinese government and the Korean government have put in place the long term strategic vision of what they can do for other countries.
"And I think this vision is missing in most of the public sector and for the government, everywhere in Europe.
"I think it's very important that we are able to - and I hope the European Commission will - put in place regulations, certifications, public ordering and a vision of where we want to go long term with balanced partnerships with all the players."
OVHcloud boss: European cloud providers need to stand up to the US hyperscalers
Michel Paulin says UK and European providers should get a bigger slice of global cloud spend, hopes for US-style public sector support
OVHcloud's priorities in 2023
The French cloud computing firm started the year strong by gaining six new Database-as-a-Service solutions through a partnership with Finnish software company Aiven.
The Paris-based group declared it was going to market with a new suite of enterprise file storage services with US vendor NetApp shortly after.
OVHcloud's growth was not restrained to only channel partnerships, boasting the acquisition of Paris and San Francisco-HQ ForePaaS and expanding its footprint with a new €30m data centre in France.
"Our second priority this year is to continue to expand internationally. Today we have operations and data centres in four continents," Paulin told CRN.
"We will extend also with the new data entre in Toronto, Canada, new data centres in the US, and we will launch 15 new data centres in next two years to be able to continue to grow and to accelerate our growth into these regions."
OVHcloud managed to escape being curbed by last year's economic turmoil that has seeped its way into 2023, exceeding sales targets in its FY22 results with revenues of €788m, up 18.8%.
The company attributed its progress to the "overall cloud market dynamism", in particular the significant growth opportunity in public cloud and private cloud.
Lifting the lid further on OVHcloud's business strategy for 2023, Paulin in fact said the group's plan has not altered since its origin following the successful €460m IPO in October 2021, and reaffirmed his trust in the cloud, from which the company clearly continues to reap the rewards.
"We believe the need for cloud solutions will remain and will remain very strong. OVHcloud has most, if not all, of the attributes to be able to address what the public sector and bigger corporations, tech companies and SMEs need to be able to do so," he told CRN.
"We will continue to apply what were our key priorities for the next four or five years. The main one is to continue to innovate and to continue to propose new solutions with a specific focus on platform as a service."
OVHcloud on price rises
Another detail which may have helped the group maintain revenue growth last year was its move to increase prices for existing services by 10%. The rises were in line with industry-wide increases and aimed to mitigate inflation on overall cost.
On how the global economy may impact OVHcloud in 2023, Paulin unfortunately doesn't possess a crystal ball.
"It's very difficult to make a prediction of what's going to happen in 2023. We decided to increase our pricing because we want to maintain the right level of productivity to continue to invest, recruit and to innovate," he said.
"I still do believe that inflation will stay in 2023 and potentially we might have some adjustments."
This article first appeared in Computing's sister site CRN.