Synergy Research published some seemingly paradoxical numbers of the European cloud market this week. The good news was that the company found that for the period beginning in 2017 and through the second quarter of this year, the market quadrupled, to € 7.3 billion ($ 8.8 billion), while revenue from the European cloud providers doubled.
The bad news? Those same European-based cloud providers actually lost ground in market share. You may be wondering how such a scenario is possible, but the vast majority of that revenue went to the big three US-based cloud infrastructure providers: Amazon, Microsoft, and Google.
What else is new?
These are the same three companies that control the vast majority of the cloud infrastructure market around the world, so it should come as no surprise that Synergy sees a similar pattern in Europe. But Synergy principal analyst John Dinsdale says that despite that, EU providers should be happy with the good news rather than worrying about the bad.
“While the higher growth opportunities provided by conventional public cloud services have been missed, some have forged sustainable positions as national champions or strong niche players,” Dinsdale said in a statement on the numbers.
The big three represent almost 70% of total revenue in Europe over the four-year period. The European leader in the cloud during that time was Deutsche Telekom, with just 2% of the pie. Others with even smaller chips include OVHcloud, SAP, and Orange, and many others have even smaller bits.
While these numbers are clearly negligible compared to market leaders, the fact is that the market is so large and growing so fast that even a small amount can add up to a good chunk of revenue. In Deutsche Telekom’s case, that 2% stake translates to 146 million euros ($ 170.7 million), which isn’t terrible as a side hustle for its overall telecom business.
To give some context to these regional figures, global cloud infrastructure revenue was $ 42 billion last quarter after hitting $ 129 billion in 2020. It is growing at a rapid pace and, as cloud adoption is increasing worldwide, Europe is no exception to this trend. In fact, Dinsdale projects that the market will continue to expand for years to come.
The Big Three certainly recognize this, as these companies continue to invest heavily in data center construction in Europe, spending € 14 billion ($ 16.3 billion) on equity investments over the past four quarters. Despite this, European suppliers can still earn hundreds of millions of euros simply by sticking to their strengths.
“The key for them is to stay focused on use cases that have stricter data sovereignty and privacy requirements and on customer segments that require a strong local support network,” said Dinsdale.