July 16, 2024

European cloud providers are growing revenue but losing market share, Synergy data shows

4 min read



The European cloud market place could have grown just about fourfold because 2017 and is now valued at $8.8bn, but study demonstrates that area support suppliers go on to reduce share to their US counterparts.

Though the share of the current market that European cloud vendors maintain has fallen from 27% to 16% due to the fact 2017, details compiled by IT market watcher Synergy Research Team reveals that these same organisations have managed to double their profits more than the same time.

“Should European cloud vendors be pleased that they have more than doubled their revenues in a four-12 months period of time, when the market place has grown pretty much fourfold? Really, of course,” said John Dinsdale, main analyst at Synergy Study Team.

This condition of affairs can be effortlessly attributed, he ongoing, to the point that none of the European cloud companies have managed to match the scale of the US general public cloud giants that dominate much of the global cloud industry.

“The struggle for top positions in the cloud market has been fought about several several years and the fact is that there was not a European contender. This is a game of large scale and not a person of the European cloud providers will come close to the scale necessary,” he explained.

To this level, Synergy’s knowledge reveals that the world’s most significant a few cloud firms – Amazon World wide web Expert services (AWS), Microsoft and Google – now collectively account for 69% of the European marketplace, and their share is continuing to maximize.

“Among the European cloud providers, Deutsche Telekom is the leader, accounting for 2% of the European market place, followed by OVHcloud, SAP, Orange and a lengthy record of countrywide and regional players,” reported Synergy, in a investigation be aware. “The equilibrium of the European marketplace is accounted for by lesser US and Asian cloud companies, which are steadily shedding share.”

The very best detail that European vendors can do is aim on carving out a specialized niche for by themselves and undertaking what they can to go on rising their cloud income, even as their market place share continues to acquire a strike from the US giants, advised Dinsdale.

“European cloud companies could be quietly pleased that they have more than doubled their revenues in a 4-12 months period”
John Dinsdale, Synergy Research Team

“The crucial for European firms is to focus on what they can efficiently develop and protect and to not fret about the broader mainstream cloud sector,” he mentioned.

“European cloud vendors could be quietly pleased that they have a lot more than doubled their revenues in a four-yr time period. When they have missed out on the larger-advancement possibilities afforded by mainstream general public cloud services, some have carved out sustainable positions for them selves as nationwide champions or powerful specialized niche players.”

Looking ahead, Dinsdale reported it was unlikely that a lot would improve in the coming yrs relating to which players are dominating the industry and that European companies should not concern them selves with worrying about how to take in into the US cloud giants’ share.

“It is nearly unachievable to consider the recent marketplace dynamics changing substantially in the following five decades. This is a game of scale and the significant a few US cloud vendors have ploughed above €14bn into European capex [capital expenditure] in just the previous 4 quarters, a lot of this used on a ongoing drive to improve and broaden their regional community of hyperscale datacentres,” he additional.


Resource backlink According to top-tier data provider Synergy Research Group, European cloud providers are increasing their revenue driven by solutions and services. However, despite rising profits, the market share of European cloud providers has been continuously eroding.

According to the latest figures, the ‘big five’ – AWS, Microsoft, Google, IBM and Alibaba – made up 77 percent of the total revenue generated by public cloud providers in Europe. This represents a 3 percent increase from the previous year.

At the same time, the proportion of European-based public cloud providers decreased by 6 percent, down from 17 percent to 11 percent. This was driven by a decline in the revenues of European-based providers from the big five, which dropped from 29 percent in the second quarter of 2018, to 25 percent in the second quarter of 2019.

This indicates significant market consolidation among the big five, with the larger, international providers dominating the market while at the same time squeezing the revenues generated by smaller, regional operators.

The sheer scale and vision of the big five is impressive, with their leading platforms continuing to grow in sophistication and capability as they increase their investment in technology and infrastructures.

However, these same trends are also having negative externalities. Market concentration of this kind limits company choice and drives up pricing, contributing to a less competitive landscape. For industry watchers, these latest figures reveal the importance of entrepreneurship and investment opportunities in the cloud space.

All eyes will be on Europe to see how the region’s cloud providers will react to the changing market conditions and bounce back against the tide of larger, international providers. Leveraging the strengths of their local expertise, agility and customer service, the keys to success for European cloud providers will need to be innovation and responding to market needs.