OVH (France) – Europe’s Amazon (in the making) of cloud computing

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| The European | 23rd October 2018
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The previous decade witnessed high costs of maintaining data centres. Expensive servers, competitive salaries of skilled professionals, data centre environment control costs, business continuity planning etc. Maintaining in-house data centres was not viable for many companies. However, having no other option they were forced to bear these costs and (also) maintain a business continuity plan to deal with unforeseen system breakdowns. The current decade brought in a radical shift in data processing and storage business.

Uber offers an affordable ride-sharing service, Airbnb offers cheap short-term rentals and WeWork offices offer low-cost office space at prime locations. One thing common in the business models of these three companies is that they are dedicated service providers providing services to their customers in their niche areas; transportation, accommodation and office rentals.

Necessity is the mother of invention. To get rid of inefficiencies in building and managing data centres, a separate service industry, Cloud computing, evolved. Dedicated data management companies opened shops and started offering Cloud computing services.

Over the period of time, two tech giants surfaced in the cloud computing industry; Google and Amazon. At present, Amazon with its behemoth online presence rules the cloud computing industry.

While Google initially started with free/low cost “public” cloud computing business, Amazon was business-centric from the very start. One of the main reasons that Amazon is leading the race is its popular “cloud partner” program.

Amazon Web Service (AWS), the name of Amazon’s cloud computing service, launched Amazon Partner Network (APN). AWS partners mainly “re-sell” AWS and provide technical support in implementing AWS. AWS partners also offer post-implementation support.

Key facts and figures from the published details (for the year ended 2017) of Amazon Partner Network (APN) are given below:

• In 2017 more than 10,000 new APN Partners were added. (The total count is not disclosed)
• Over 60 percent of APN partners are headquartered outside the United States.
• The majority of Fortune 500 companies and over 90 percent of Fortune 100 companies utilise APN Partner solutions and services.

The facts and figures given above are impressive. For many, it might seem that Amazon is a “barrier to entry” in the cloud computing business. However, this is not true.

The names and details of top cloud computing providers are readily available on the internet. However, one European company which has a significant presence in the global cloud computing landscape is OVH of France. It is a privately held company. OVH is present in 4 continents and offers cloud computing services to business startups, professionals, small and large companies. It has more than 1 million customers in 138 countries.

Consumer Data Privacy

All big techs (Apple, Google, Facebook, Amazon and others) have always remained in the crosshairs of the regulators for misusing consumer data.

The European Union is one of the best regions of the world where consumer data privacy is taken very seriously. The EU has more than once demonstrated its strict stance on consumer data privacy by imposing stiff penalties on big techs for violating consumer data privacy policies. The recent General Data Protection Regulation (GDPR) implementation directed by the EU regulators was an overhaul of the rules governing consumer data privacy.

OVH of France claims that it respects the privacy of consumer data and its cloud computing services have been designed to protect consumer data from being misused.

Latest News

Reuters (18 October 2018) reports,

“French cloud computing company OVH plans to triple investment in the coming years to take on U.S. Internet giants Amazon and Alphabet’s Google in this fast-growing (Cloud computing) sector”.

“The privately-held company will invest between 4-7 billion Euros (US $4.6 billion – US $8.1 billion) over its next five-year plan starting in 2021”.

Being a privately held company, OVH does not disclose detailed financial information. However, the company says it has annual sales of about 500 Million Euros and positive earnings before interest, tax, depreciation and amortisation (EBITDA).

The company also says that it is growing at a (annual) rate of 20 percent. It is also exploring possibilities of business expansion in other countries, including Russia and China.

OVH is backed by U.S. investment firms KKR and Tower Brook Capital Partners, which bought a minority stake in OVH for 250 Million Euros in 2016.

OVH – Facts & Figures

• The company is based in Roubaix, France.

• It has 27 data centres on 4 continents

• Global network capacity of OVH servers is 14 Tbps

• Three types of Cloud services are offered; public, private and hybrid

• Number of Public Cloud instances deployed each month are 650,000

OVH for business startups

The founder and owner of OVH, Octave Klaba started the company by obtaining a loan of Euro 3,800. To encourage business startups, his company offers a “Digital Launch Pad Program”.

This business startup program has three categories.

Ideation: The Ideation level helps startups who are either in the creation phase, getting off the ground through personal funding or those in the pre-seed stages.

Build: The Build level helps startups who are in the product/service implementation phase and are finalising strategic positioning, mainly supported through local funding.

Market: The Market level is for startups that have reached the maturation phase and are ready to tap a specific market or have strong growth potential and a need for greater financing. These startups usually have their sights set on an international expansion.

Future Prospects

OVH is not a tech giant, but its cloud computing service offerings and business strategy are in line with tech giants. The core difference is the scale of its operations.

Keeping in view its future investment plans, the company is moving in the right direction. OVH is also open to the IPO option if more capital is required for the expansion. It will be no surprise if OVH gives Amazon and Google a tough time in Europe.

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