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Also posted on: IT Infrastructure
By their own admission OVH, the French cloud and hosting company, have not been very good at telling the world what they do. Coming away from the OVHSummit in Paris on 17th October it is clear to me that they are much more than a web hosting company. They have a scale and diversity of offerings around hosting, public and hybrid cloud that is surprising. Their challenges will be to make sense of and articulate the range of differing services they offer, rationalise what makes sense for which market segments, plug one or two glaring gaps in their offerings and learn that “listening to their customers” does not necessarily mean you have to be everything to everybody.
Backed by two successive rounds of funding which have yielded €250m and €400m respectively, OVH have an aggressive plan to roll out a new data centre every 4 months. There are currently 27 data centres globally, with a plan to take this to 50. They have their own global fibre network that provides a total capacity of 10Tbps. They design and assemble their own servers. They have designed and implemented an innovative water cooling system for their server and storage racks. They have a wide range of dedicated server, hosting, public, private and hybrid cloud configurations. They are committed to open systems, making wide use of OpenStack architectures and APIs.
Up to now this mix of passionate, highly motivated engineers with a slight twist of Gallic pride has served them very well. Last year revenues grew 30%. Cloud services grew even faster at 50% and now represent 50% of total OVH revenues. The plan is to more than double the workforce to 4,200 people and have revenues approaching €1bn by 2020. Impressive stuff; but challenges lie ahead.
In an attempt to rationalise the messaging and positioning around the wide array of products they offer to SMEs and large enterprises, OVH announced three new sub-brands, OVHCloud, OVHSpirit and OVHMarket. While OVHCloud is fairly self-explanatory, there seems to be a desire to shoehorn every product OVH offers into one or more of the three sub-brands. There is still some work to be done to describe and position these new groupings coherently.
I mentioned in the introduction the one or two glaring gaps. If you are a highly competent, mature IT organisation with access to skilled people, then OVH have a range of highly performant and very competitive IaaS and dedicated server offerings on a global basis that you would find very attractive. Increasingly, however, there is a need to provide development environments, cloud management and specific use case offerings, like their newly announced FPGA as-a-service for developers in the video and content markets, that make it easier for the average enterprise to buy and use.
The other glaring gap is the apparent lack of a coherent channel strategy. I assume a large percentage of small companies using their IaaS and dedicated server offerings are IT oriented start-ups. Most commercial SMEs are moving, or have already moved to embrace SaaS. The ISVs developing those SaaS applications all need fast, reliable, secure and scalable infrastructure, which OHV has in abundance. Yet there was no mention of those players.
OVH might complain about my comments on channel, particularly in the light of their bold decision to acquire VCloudAir from VMWare. This gives OVH a very strong platform to go after the large number of global enterprises dependent on VMWare for virtualisation and offer them a seamless journey to deploying hybrid clouds. VMWare joined OVH in joint presentations at the Summit and there is obviously an excellent relationship and some good synergies. However, with VMWare working more closely these days with AWS and OVH publicly committing to a range of OpenStack based approaches, getting the joint go-to-market strategy right will be a huge determinant of the long-term success of this relationship.
I believe overall, OVH needs to be taken very seriously as a global cloud player. If you are a non- US customer, then the way they have kept their US operation separate from a legal and operations point of view provides a way of ensuring you are beyond the reach of the US Patriot Act, as long as you don’t use their US data centres. This could be a very attractive option for some and is unique among the very large Cloud Service Providers. The markets they are addressing are very competitive and their competitors have very deep pockets. OVH has a lot going for it, but needs to focus on what makes it different and how to articulate that differentiation.