Daily Management Review

US Giants Like Amazon And Salesforce Gaining From Europe's Cloud Market


The tech sector of Europe has been clouded by data privacy scandals, stricter regulations and the escalating war of tariffs between the United States and China in the last year.
However cloud computing is one tech sector whose performance and outlook is not as bleak as the other segments.
According to the International Data Corporation (IDC), over the next three years, it is anticipated that there would be a growth of 22 per cent in Europe's public cloud market.
For example, last quarter, a 31 per cent growth in revenue from its European business was reported by Salesforce. "We were the fastest growing region in the world, even though some of them are smaller, so we're obviously very excited about that," Chris Ciauri, Executive Vice President of Salesforce EMEA, said in a television interview in December.
In place of a local in-house hard drive or server, users and businesses can store and access data, apps and software over the internet when they access cloud computing services. As an increasing number of companies are steadily adopting online infrastructure offered by US tech giants such as Amazon, Microsoft and Google, there has been in increase the global investment in cloud services. In 2021, the revenue generated from public cloud services would be over $278 billion compared to $145 billion in 2017 according to estimates research firm Gartner.
According to a report by IDC senior program director of European software Carla Arend published in 2018, there is a gap of at least 18 to 24 months in the adoption of cloud computing among European organizations compared to those in the US with the US leading the race. The primary reason for this is because of cultural difference between Europe and other regions where European organizations adopt a more cautious, pragmatic attitude toward new technology and has to do less about the European companies themselves lagging behind, Top of Form
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Arend said.
"European organizations, they are quite allergic to hype. Only when they really see the tangible benefits, will they embrace the technology," she said.
Currently however, the pace at which European organizations are getting into the cloud market has hastened up following such organizations taking some initial time to evaluate the pros and cons of shifting operations from their own premises into the cloud, Arend said.
According to Ciauri of Salesforce, recently a number of European organizations have moved to their cloud solutions which range from Aston Martin to Eurostar to Spanish bank BBVA.
A lack of alternatives is another reason why the U.S. companies are gaining from cloud adoption in Europe.
"There are no European megacloud providers," Lauren Nelson, a principal analyst at research firm Forrester, was quoted in a newsmedia. "This means using a U.S.-headquartered company or a smaller player."
The void is being filled up by U.S. cloud players through a process of expanding their business throughout Europe. In a December comment to the media, Amazon's AWS said that the company already serves "tens of thousands" of customers in the Nordics and has started functional new data centers in Sweden. Microsoft would aloe be building new data centres data centers in Norway, Germany and Switzerland, the company announced in its plans last year.
"Of all the regions in the world, Europe is the one that's really humming for us," Brian Halligan, CEO of cloud marketing and sales firm HubSpot was quoted by CNBC at the Slush tech conference in Helsinki in December.
"People have talked about the European economy slowing down," Halligan said. "We haven't seen any sign of that."