Can OVH US capture the hybrid cloud market?

Can OVH move to the Next Level
Can OVH move to the Next Level
Russ Reeder, President and CEO at OVH US (Image credit
Russ Reeder, President and CEO at OVH US

At OVH Summit, Russ Reeder, CEO, OVH US gave more details on the company’s plans for the US market. Reeder was in upbeat mood as he outlined the opportunity for OVH US. What will be interesting is how much of the US cloud market Reeder can grab by 2020. That’s the date by which the OVH Chairman, Octave Klaba has said the Group is planning to hit €1 billion in turnover.

The US dominates the global cloud market. 56% of Infrastructure as a Service (IaaS) sales are made inside the US. In 2016 Reeder said the US spent $21.4bn on IaaS. By 2020 that is expected to more than double to $50.6bn. Reeder has previously described OVH as the largest cloud company the US has never heard of. So can he grab a slice of that market?

Avoiding the low-end with real services

Reeder and OVH began to talk after KKR invested in OVH. Not long after Reeder came on board he facilitated the acquisition of vCloud AIR from VMware. It was an interesting move that plays to his market position for OVH US. vCloud AIR gives OVH an established and revenue generating hybrid cloud business.

According to Reeder, 65% of all cloud is private on-premises cloud in the US. Importantly, 85% of VM workloads are run on-premises. All of this plays to a substantial opportunity in the hybrid cloud space. OVH, of course, has a longer history with VMware than just the vCloud AIR deal. It currently uses vSphere as part of its private cloud solution.

As part of its relationship with VMware, OVH has announced its HCX technology. This will allow customers to “hot” migrate VMs from one data centre to another, even if that data centre is on-premises. Helping this happen is vRack Connect, a service OVH introduced last year. vRack Connect is about more than just hot migration. It will make it much easier for OVH customers, in and outside the US, deploy hybrid cloud. For Reeder, it means he can stay away from the low end market and instead focus on the lucrative and fast growing demand for hybrid.

Another part of the solution is multi-cloud. OVH is an OpenStack partner. It has participated in all the interoperability testing over the last year. Customers can now deploy a workload to multiple OpenStack clouds and manage them all from a single location. Over the last six months, multi-cloud has become a core theme at IT conferences especially in the US.

Reeder has described multi-cloud as the 3rd generation of cloud computing. He appears very focused on making OVH US the key player in this space.

What does this mean

OVH has some very ambitious goals. Among them is the €1 billion turnover by 2020. To reach that number it will require serious support from OVH US. When Klaba was asked what he expected OVH US to contribute to that goal, he refused to say.

Reeder has vCloud AIR, vRack Connect, hybrid and multi-cloud at his disposal. If he only manages 1% of the projected US IaaS market by 2020 that’s a whopping €500m. It’s not unreasonable to see that figure as an underestimate and one would think that OVH US should be able to reach a significant market share if it is to be deemed successful.

Success in the US is also important to the future of OVH. It recently told analysts that it wants to be a tier one player. Klaba has publicly said that OVH wants to compete with the large US and Chinese players in the cloud market. To do that, a US market share of at least 5% would be considered table stakes. If Reeder can deliver that by 2020 he will have smashed OVH’s goals and made a lot of people take notice.

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