In its latest study, Synergy Research Group reports a concentration of cloud services in the hands of US firms. AWS, Microsoft and Google alone account for almost three quarters of customers’ consumption in the European market. The players in this region represent only 2%.
The cloud belongs to the American giants, that’s a fact. Furthermore, these large American cloud providers have succeeded in establishing themselves in the European market. Synergy Research Group’s latest report indicates that this market, which includes the various cloud activities (IaaS, PaaS and SaaS) is now five times larger than it was at the beginning of 2017, reaching 10.4 billion euros in the second quarter of 2022. “During the same period, European service providers increased their cloud revenues by 167%, but their market share fell from 27% to 13%, their growth rate being well below the global cloud shooting growth market. And for good reason: the biggest beneficiaries of market growth are none other than Amazon, Microsoft and Google. These global cloud players alone now account for 72% of the regional market, and their share continues to grow steadily. Behind them we find, without much surprise, IBM, Salesforce and Oracle.
As for European operators, Synergy Research Group indicates that SAP and Deutsche Telekom dominate, each representing 2% of the European market, a very small share compared to the giants from the other side of the Atlantic. They are followed by OVHcloud, Telecom Italia, Orange and a large number of national and regional players. Because of this observation, John Dinsdale, chief analyst at Synergy Research Group, does not hesitate to point out the qualities that European companies lack in order to shine. “The cloud market is a game of scale where future leaders must place huge financial bets, must take a long-term view of investment and profitability, must maintain a focused will to succeed and must constantly strive for operational efficiency. No European company has come close of this set of criteria, and the result is a market where the top six are all American companies,” he said.
An exploding market
Over the past four quarters, revenue from European cloud infrastructure services (including IaaS, PaaS and hosted private cloud services) totaled more than €27 billion, an increase of 41% over the previous four quarters. IaaS and PaaS services account for more than 80% of the market and are also growing faster than the smaller hosted or managed private cloud segment. Some of the highest growth is seen in PaaS with database, IoT and analytics services.
“As US cloud providers continue to invest more than €4 billion every quarter in European investment programs, this represents an impossible hill for companies that want to seriously challenge their market leadership. As a result, European players have mainly settled into positions , where they serve local groups of customers who have specific local needs and sometimes work as partners for large US cloud providers,” adds John Dinsdale. The latter refers to recent initiatives such as Bleu (Microsoft with Orange and Capgemini) and S3NS (Google Cloud with Thales). A way for European operators to get a piece of the pie, no matter how small, but also to meet the requirements of certain sectors – finance, defense, public sector – with data management and security needs and thus play ” “trusted cloud” card. It should also be noted that the Danish Competition Authority has launched an investigation into the cloud market in France, and that Europe -The Commission has been contacted by around fifteen European actors against the anti-competitive practices of American companies.