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European cloud providers are growing revenue but losing market share, Synergy data shows

Latest data from Synergy Research Group highlights changing dynamics within the European cloud market, as the US giants continue to grow their share

The European cloud market may have grown nearly fourfold since 2017 and is now valued at $8.8bn, but research shows that local service providers continue to lose share to their US counterparts.

While the share of the market that European cloud providers hold has fallen from 27% to 16% since 2017, data compiled by IT market watcher Synergy Research Group reveals that these same organisations have managed to double their revenue over the same time.

“Should European cloud providers be happy that they have more than doubled their revenues in a four-year period, while the market has grown almost fourfold? Actually, yes,” said John Dinsdale, chief analyst at Synergy Research Group.

This state of affairs can be easily attributed, he continued, to the fact that none of the European cloud providers have managed to match the scale of the US public cloud giants that dominate much of the global cloud market.

“The battle for leading positions in the cloud market has been fought over several years and the fact is that there wasn’t a European contender. This is a game of massive scale and not one of the European cloud providers comes close to the scale required,” he said.

To this point, Synergy’s data shows that the world’s biggest three cloud firms – Amazon Web Services (AWS), Microsoft and Google – now collectively account for 69% of the European market, and their share is continuing to increase.

“Among the European cloud providers, Deutsche Telekom is the leader, accounting for 2% of the European market, followed by OVHcloud, SAP, Orange and a long list of national and regional players,” said Synergy, in a research note. “The balance of the European market is accounted for by smaller US and Asian cloud providers, which are steadily losing share.”

The best thing that European providers can do is focus on carving out a niche for themselves and doing what they can to continue growing their cloud revenue, even as their market share continues to take a hit from the US giants, advised Dinsdale.

“European cloud providers could be quietly satisfied that they have more than doubled their revenues in a four-year period”
John Dinsdale, Synergy Research Group

“The key for European firms is to focus on what they can successfully build and defend and to not worry about the broader mainstream cloud market,” he said.

“European cloud providers could be quietly satisfied that they have more than doubled their revenues in a four-year period. While they have missed out on the higher-growth opportunities afforded by mainstream public cloud services, some have carved out sustainable positions for themselves as national champions or strong niche players.”

Looking ahead, Dinsdale said it was unlikely that much would change in the coming years regarding which players are dominating the market and that European providers should not concern themselves with worrying about how to eat into the US cloud giants’ share.

“It is almost impossible to imagine the current market dynamics changing much in the next five years. This is a game of scale and the big three US cloud providers have ploughed over €14bn into European capex [capital expenditure] in just the last four quarters, much of this spent on a continued drive to upgrade and expand their regional network of hyperscale datacentres,” he added.

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