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Gap between US cloud giants and European IT providers widens

Written by Mon 18 Jan 2021

Research shows European IT providers’ share of cloud market declined during 2020 despite record demand for cloud services

The public cloud giants pocketed record revenues in 2020 as global lockdowns sent cloud consumption into overdrive.

While Amazon, Microsoft and Google cashed in billions, the lower tiers of Europe’s IT service providers struggled to capitalise on an unprecedented opportunity to halt the hyperscaler march to cloud dominance, new research has revealed.

Instead, in 2020 the public cloud kingpins inched closer to complete control of the €23 billion cloud market, increasing their combined slice of the continental cloud pie to 66 percent, according to the latest number crunching from data centre and cloud market analysts Synergy Research.

Meanwhile, local service provider share of the European cloud market dwindled to a shaky 16% –  a number which looks all the more fragile given its steady year-on-year plunge (European cloud providers had a comparatively solid 26% share in 2017, according to Synergy). Among regional providers, Deutsche Telekom leads with 2% of the market, followed by OVHcloud and Orange.

How can these and other local cloud providers dent the US cloud giants’ devouring of the European IT market? Jon Dinsdale, chief analyst at Synergy, shared a dim view of their chances in an analysis of the latest market figures.

“European cloud providers are trying to gain more traction in the market by focusing on customer segments and use cases that have stricter data sovereignty and privacy requirements,” Dinsdale said.

“This has led to the Gaia-X initiative which represents an attempt to reverse the fortunes of the European cloud industry. Their efforts are laudable but the trouble is that this is a bit like King Canute attempting to stop an incoming tide.”

In order to compete with Amazon Web Services, Microsoft Azure and Google Cloud Platform for “untapped revenue opportunities”, Dinsdale said regional providers must “break free” of niche positions by increasing both funding – and something slightly less quantifiable – sheer will power .

The big three US cloud providers now own 67 hyperscale data centres in Europe with over 150 additional local points of presence.

Since the beginning of 2017, the European cloud market has grown more than threefold, reaching €5.9 billion in the third quarter of 2020, though Synergy estimates full-year 2020 European cloud infrastructure service revenues at €23 billion, up 31% from 2019.

Written by Mon 18 Jan 2021


Europe market
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