The Growth of Cloud Infrastructure in Europe

May 23, 2017
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2017 is seeing cloud infrastructure rise to a new prominence, all across the world but especially in Europe. At a keynote event in Barcelona, Atlassian CEO Scot Farquhar announced a wave of new investments in cloud infrastructure across Europe and noted the motivations behind these developments: “Our European cloud customers will experience improved performance and reduced latency. We’ll continue to add new cloud hosting regions around the world”. This investment has come as part of a wider trend in the race to the cloud across Europe. Today, the European market is home to a wealth of cloud providers: a Cloud spectator report from this year lists industry giants 1&1, Amazon Webservics, Microsoft Azure, OVH, Rackspace and Softlayer IBM as some of the largest.

Right now, Europe’s cloud infrastructure sits at the intersection between the age of 4G and the age of 5G. As we enter the age of 5G, the need for on-demand content will reach new highs. Atlassian announced that Europe now accounts for 40% of the company’s revenue (roughly $159.9 million). In his view, the European cloud market is huge.

It’s no surprise, then, that industry giants like Oracle are announcing they will begin to lay deeper inroads into Germany this year, as they bring their cloud services to Europe. The Oracle upscaling will see three new domains established in Frankfurt, and the European debut of the Gen2 cloud in Europe for the first time, just as Oracle expanded its cloud coverage in the UK in January.

Similarly, Chinese Internet firm Tencent has announced that it will be opening new data centers across Europe, with future sites being constructed in Frankfurt, Moscow, Mumbai and Seoul. The company states that online games, finance and other internet related industries will be the primary motivation for the upscale.

Furthering the trend of European cloud investment, cloud service provider PROS have recently upscaled their cloud facilities investing in two new Microsoft Azure Germany regions. These cloud facilities will be used to store customer data, and subject to stringent European regulations and German law. The move will place providers in good stead for the incoming GDPR. Its worth mentioning that such investment is not an entirely new phenomenon. Oracle has been present in Europe for a number of years with closely associates with companies such as Global Drinks and Lufthansa already using its cloud.

The Driving Force: Data as a Resource

With organizations across Europe, Africa and the Middle east spending over €1 billion on cloud-based IT services in the first three months of 2017, it’s clear that development of cloud services are a global priority. Why, though? The answer will depend on why you ask, but the primary reason is because data has become a resource in and of itself. Whereas companies used to pursue physical resources, they need only expand their network infrastructure to reap the rewards of a near infinite supply. As a continent, Europe’s overall demand is increasing rapidly.

According to the Cisco Visual Networking Index 2016-2021 Global mobile traffic grew 63 percent in 2016, averaging 7.2 exabytes a month. However, what’s even more interesting is that mobile video traffic accounted for 60 percent of total mobile data traffic in 2016. Global usage of mobile video traffic indicates that we are upping our data consumption. The European expansion of Cloud Services is an attempt to meet consumer demand. We continually need less latency and more bandwidth as our demands grow. Atlassian, Tencent and Microsoft Azure are all attempting to upscale their cloud services in an attempt to meet this demand. When Oracle’s president of development was asked about their German expansion, he stated that ‘Oracle will be providing EU-based cloud customers with unmatched performance availability, and governance, and support of the broadest range of enterprise applications from any cloud platform’.

Whilst consumer demand is a massive motivation for the expansion of cloud services, there is a lot to be said for the inherent value cloud services offer to business processes. As analyst Dave Bartoletti notes, “Enterprises with big budgets, data centers and complex applications are now looking at the cloud as a viable place to run core business applications”. Rather than attempting to expand their computation power through expensive hardware, more and more companies are simply outsourcing their server needs to third party providers. The result is on-demand upscaling.

One thing is clear: the Cloud is taking us into a new era of data prominence.