A view of Europe's own cloud computing market

Europe’s cloud market is dominated by Amazon Web Services, Microsoft Windows Azure, and Rackspace. So the same providers that serve the rest of the world. Each of these global providers has a local presence in Europe and all have made efforts to satisfy European-specific concerns with respect to privacy and data protection. Nevertheless, a growing number of local providers are developing cloud computing offerings in the European market. For GigaOM Research, Paul Miller and I explore in more detail the importance of having these local entrants and asks whether Europe’s growing concern with U.S. dominance in the cloud is a real driver for change. The goal is to discover whether there is a single European cloud market these companies can address or whether there are several different markets.

Key highlights from the report

  • European concern about the dominance of U.S. cloud providers
  • Rationale for developing cloud solutions within Europe
  • The value of transnational cloud infrastructure
  • The value of local or regional cloud infrastructure
  • A representative sample of Europe’s native cloud providers

European cloud providers covered in the report

  • ProfitBricks
  • T-Systems
  • DomainFactory
  • City Cloud
  • Colt
  • CloudSigma
  • GreenQloud

Get the report

To read the full report go to “The state of Europe’s homegrown cloud market“.


The cloud computing market in Germany 2013

The significance of cloud computing continues to increase in Germany. If you believe in local market researchers the interest in on-demand services continues unabated and is even increasing steadily. The same can be said for the vendor side. Periodically, new services or even providers appear on the market. In particular, the software-as-a-service (SaaS) market is enjoying growing popularity in Germany. Infrastructure-as-a-service (IaaS) providers are similarly well represented, but should not make the same mistakes as their international competitors. For platform-as-a-service (PaaS) provider is still enough space.

Cloud demand in Germany with steady growth

Believing in the figures from market researcher Techconsult, already a third of smaller German companies use cloud solutions. The greatest demand is there from the mittelstand preferred from trade, banking and insurance industry. Large corporations and medium-sized companies are among the leaders in the use, but also the small ones catching up rapidly. In the last year, only eight percent of small-and medium-sized companies planned to use cloud solutions, this year it’s already 24 percent .

29 percent of companies in the trade industrie are interested in cloud computing. This is an increase by 21 percent compared to last year. In service industries every fourth company relies on cloud services, on-year increase of over ten percent. The biggest interest comes from the field of banking and insurance. 33 percent of the companies in these industries rely therefore on cloud technologies, although the cloud was considered in the previous year rather skeptical.

Conferences show a similar behavior

At the first Amazon Web Services Summit in 2010 in the Berlin Kalkscheune manageable 150 participants could be counted. Meanwhile, Amazon has moved to the Berlin Conference Center, reaching 1,500 participants, so many that monitors had to be placed outside. The situation is similar with Salesforce. The as a SaaS CRM provider well known company welcomed at this year’s Customer Company Tour 13 up to 1,800 visitors, according to their own account.

Compared to the masses, that regularly rush on American conferences these numbers are rather Peanuts. In Germany, however, very good odds.

Distribution of the cloud computing provider in Germany

What the examples of Amazon and Salesforce show: Both companies are cloud service providers and do not trade with virtual resources. Even if Amazon was the first IaaS provider on the market and is considered as a prime example, it is about the web services around the infrastructure that provide the customers with the actual value. It’s the same with Salesforce. Started as a hybrid of SaaS and PaaS provider, the CRM vendor directed its platform to the future and topics such as The Internet of Things.

In the two points above, most of the German cloud providers stumble. The IaaS market in Germany is highly developed. In addition to many subsidiaries of international companies more and more vendors from Germany are looking for their place in this cloud segment. However, all rely on the same strategy and make the same mistake as many international vendors to gain IaaS market share. First, they focus exclusively on virtual resources (computing power, storage space) and provide no added value services around it, see Amazon AWS. Second, corporate customers are addressed exclusively. Developers are not be considered. From a financial perspective this is attractive, but means that developers must inevitably avoid to U.S. based providers, as there are no similar German but also European alternatives.

The largest cloud market in Germany is provided by the SaaS provider. Here, many famous IT players attend but also increasingly young companies with innovative ideas. SaaS offerings are primarily driven by market places from major service providers such as Deutsche Telekom or Fujitsu. Both collect, for them, high-quality services under one roof and provide an assorted offer, companies can choose from. A special characteristic of many German SaaS solutions is the fact that they take care of the construction of the necessary cloud infrastructure and consciously set on a German data center. Issues such as the future security of their own solution and trust by the customer are the main decision criteria.

The market for PaaS provider is still very open. The number of providers that are launched directly from Germany, can be counted on one hand and is very manageable. Moreover, two out of three set on IaaS offers from U.S. provider. In addition to some international competitors, here are still opportunities for a PaaS, which is operated directly in Germany. However, the large (German/ European) IaaS providers are asked to give young entrepreneurs and developers the ability to develop such a solution faster.

Germany is on a good way to the cloud

At the end of the day it can be said, that the German cloud computing market has a well balanced ratio of XaaS solutions. However, there is still some potential left behind by not addressing the important group of startups and developers with appropriate services for them, and this therefore having to avoid to overseas provider.

The distinguished figures in terms of cloud adoption in Germany show that the confidence in the provider is growing steadily and the understanding for the value of cloud services has reached. But it also shows that the providers have worked on themselves and are willing to eliminate the concerns and criticisms of their potential customers.