Earlier this week, French public IaaS/PaaS provider OVH announced the opening of a public cloud ‘Local Zone’ in Brussels, Belgium, and Madrid, Spain. The launch is part of an ambitious roadmap consisting of up to 150 Local Zones to support geographical expansion. In 2024, OVHcloud intends to launch up to 15 European Local Zones, with potential sites including Prague (Czech Republic), Marseille (France), Milan (Italy), Amsterdam (Netherlands), and Zurich (Switzerland).
The public cloud roadmap is underpinned by OVH’s acquisition of Germany-based Gridscale in 2023. Gridscale is a provider of hyper-converged infrastructure that delivers on three key challenges for OVH:
- Boost competencies in Edge Computing with low latency and local data residency compliance.
- Expand on-premises cloud services, empowering customers to retain ownership by deploying products on their own infrastructure while accessing OVHCloud’s 80 IaaS and PaaS solutions with cloud-native features.
- Open new public cloud regions by 2026 in colocation data centers, focusing on major global cities.
According to OVH, Local Zones require modest infrastructure needs while hosting in colocation centers, offering greater agility and flexibility. Local Zones are also less CAPEX intensive in comparison to standard data centers, giving OVH a competitive advantage in public cloud environment deployment speed.
With data residency regulations growing in Europe, e.g., Schrems II, and specific industries (healthcare, manufacturing, financial services, the public sector) bound to stricter compliance while relying on real-time data insights, OVH adds value through faster response times for workloads with latency-sensitive services such as real-time analytics, eCommerce, Content Delivery Network (CDN), and more.
In PAC’s view, OVH public cloud Local Zone is an interesting offering for which there’s demand in the Belgian market. However, two challenges spring to mind.
Firstly, while conscious of OVH not classifying the Local Zones as a dedicated sovereign cloud offering, it does promote it for local data residency compliance in sectors such as healthcare, financial services, and government, i.e., a big preponderant of sovereign cloud offerings.
Data and cloud sovereignty environments are still niche offerings that cater to specific industries and organizations. Revenue growth for these types of offerings will likely not be a game changer for cloud providers in the next few years. Those seeking public cloud environments without specific latency and strict data requirements will likely turn to hyperscalers instead that also provide access to a much wider range of native-cloud tools and solutions, including next-gen technologies such as generative AI.
Secondly, in Belgium, Proximus is the market leader in data and cloud sovereignty through two offerings: Google Disconnected Cloud (Google public cloud experience in a private cloud setting) and Microsoft Cloud (Confidential Compute, not disconnected but highly encrypted end-to-end).
PAC sees OVH’s Local Zone offering to be more attractive to small and mid-sized organizations seeking cost-efficient solutions and faster response times, e.g., manufacturing and retail, while sectors such as healthcare, financial services, and government would most likely consider Proximus’ dedicated sovereign cloud offerings over OVH.