OVH is one of the biggest cloud providers in the world, and yet most people in the U.S. haven’t heard of it. This is a short introduction to this French Unicorn which is positing itself as a global hyperscale cloud provider,
On Starlink, presented by Geoff Huston at NZNOG 2024
[Case Study] OVH main challenges and key differentiators
1. [Case study] OVH main challenges and key differentiators
Houria TAIR- CHAUVIN
houria.tair@gmail.com
Sales, Marketing & Strategic adviser
for digital business transformations
2. Company
description
• Created in 1999 , OVH is the world's third biggest web hoster and is evolving into an IaaS cloud provider.
• OVH offers its customer a self services access to consume industrialized IT resources
• OVH main businesses are to acquire and operate infrastructure.
Business
activities
• Infrastructure-as-a-service cloud (OpenStack-based)
• Reselling Vmware, Microsoft Exchange and Office 365
• Managing virtual private servers and offering Web Hosting
Markets
• OVH will run 27 data centers ( 12 in France) in 19 countries by the end of 2017
• OVH has 32 points-of-presence globally with expansion plan into Australia, Singapore, Poland, Germany, the UK, and the US
( with Vmware acquisition mainly)
Key figures
• €320m in 2016
• 22 data centers, 1.2 million of customers, 260 000 physical servers
• 2,000 employees (nearly 300 in the U.S.) , 1m customers worldwide
Company Overview
OVH is positioning as a global hyperscale cloud provider with a strong presence in French market
Houria TAIR-CHAUVIN - houria.tair@gmail.com
3. 1999 2004 2017201620132010
OVH foundation
In a nutshell
OVH started in 1999 and never stop growing to become of the largest hosting providers worldwide.
1st equity
fundraising €250m
raised from KKR
and TowerBrook.
The biggest
data center in
Europe
Aquisition of
Vcloud air
First European
subsidiaries
First VM and
« dedicated
Cloud »
Houria TAIR-CHAUVIN - houria.tair@gmail.com
4. Business model canvas
OVH is building its own way to hyperscale market in Europe and more recently in US
z
Key partners Key activities Value proposition Customer relationship Customer segment
Cost structure Revenue stream
Assets ( Servers, Data centers)
Key Resource
Storage
DB transactions
Infrastructure (vRack project )
Data center ( design
Orchestrating, Fulfillment
Optimization
Self services,
Web-based,
direct-to-customer
Industrialization
and
automation
partner
channel
Hardware vendors
Data center buildings
Open Source
Channel
Customer conference ( OVH summit…)
Social platform
Social network
Partners
Developers
IT Professional
direct sales via the website and the API
Self services
OpenStack
Software developers
Start-up/scale-up
5,150 partners referenced on
partners.ovh.com, all trades
included. 3,950 are located in
France.
Assets ( Servers, Data centers)DB transactionsSupports & people
Others costs ( any additional cost
related to deployment…)
VMware
Capital Partners
(KR ,TowerBrook…)
5. OVH stakes and challenges
To compete in Hyperscale market OVH is taking advantage of the rapidly expanding market for cloud and internet
infrastructure services, while also broadening its customer base and services in new geographies.
• A technology-centric strategy combined with a
strong engineering culture
• OVH’s vCloud Air acquisition and its ongoing
partnership with VMware
• Strong and visible presence in Europe
• Pricing model
S W
O T
• The mass-adoption phase of the cloud is not
finalized and a lot of enterprises with great value
can be reached with a services led approach.
• Multi-cloud cloud environments continue to gain
traction in corporate IT
• OVH competes with “big bullies “ players which
have already referenced several high valuable
customers
• Channel sales development must evolve in
parallel with data center expansion.
• High level of CAPEX spending to Building
hyperscale infrastructure.
• AWS’s partner network development extension
• Growth of start-ups proposing similar services
(e.g Jaguar telecom…)
• Google’s plan to get more footprint into
enterprises
Houria TAIR-CHAUVIN - houria.tair@gmail.com
6. Multi-cloud cloud environments continue to gain traction in
corporate IT.
“Big bullies” such as AWS, Microsoft and IBM are all competing for
the same customer segment than OVH.
Pricing Pressure on SaaS and IaaS from the hyperscale is heavy.
Cognitive computing solutions are driving improvements in all
industries.
Market Outlook…
OVH is competing with strong players and is becoming quickly one of the biggest cloud providers in the world
Houria TAIR-CHAUVIN - houria.tair@gmail.com
7. Thank you
Houria TAIR- CHAUVIN
houria.tair@gmail.com
Houria TAIR- CHAUVIN
houria.tair@gmail.com
Sales, Marketing & Strategic adviser
for digital business transformations
Editor's Notes
OVH is privately held and releases next to no data.
OVH is a pure-play provider of cloud infrastructure that focuses relentlessly on two priorities.
The first is developers – it wants customers to sign up on the web page (or through the API) and consume industrialized IT resources.
The second is data centers – the company's focus is acquiring and operating infrastructure. Even the name stands for On vous heberge – "We'll host your stuff."
This has worked very well for the company since 1999. With 930,000 active customer accounts, 270,000 physical servers under management, and 18 million distinct application loads, OVH is the third biggest hosting provider in the world.
270 000 serveurs
22 datacentres
19 pays
18M d'applications web hébergées
As always in the infrastructure-as-a-service (IaaS) business, scale rules – OVH's massive scale means it can offer dedicated servers at €4.99 per month and virtual private servers (VPS) at €2.49 per month.
But that's the problem. The first and second largest providers are Amazon Web Services and Microsoft Azure – huge companies obsessed by the economies of scale that dominate the data center industry.
As a result, OVH is in a race to achieve the scale it needs to keep its pricing competitive.
This is pursued in two ways – bigger data centers and international expansion. From being focused on France, OVH has recently added sites in Australia, Singapore, Poland, Canada, Germany, and the UK, while a site in the US is under construction.
The problem is whether the dash for scale can survive a renewed wave of cloud price-cutting.
2016 saw the first equity fundraising since 1999 – €250m raised from KKR and TowerBrook ahead of international data center expansion.
Previous fundraising was a $327m syndicated loan from 2014. This permitted the company to add ~100,000 servers under management.
The 930,000 customer accounts are overwhelmingly individual developers. ARPA is on the order of €26 per month – a typical customer is not just there for the ultracheap VPS, or if so, it has multiples.
That implies a payoff time of around 10 years for the 2014 investment.
1,5 milliard d'euros d'investissements d'ici à 2020
Aquisition of Vcloud air + 14 datacenters mondiaux
On vous heberge. This is a simple, pure-play IaaS business model.
The ideal customer interaction is quite simply that a developer signs up with a credit card and drives away a virtual machine.
As with all such businesses, the assumption is that customers are technical experts who know what they want and are not intimidated by a focus on technology.
The IaaS market is ferociously commoditized.
OVH constantly emphasizes price.
Unlike QSC, it accepts head-on price competition with the hyperscale providers.
Being "non-Five Eyes" was important, until it wasn't.
OVH made a point of projecting Frenchness and alluding to its data centers being "outside the Patriot Act jurisdiction area."
But now it has infrastructure in Canada, Australia, the UK, and soon the US – so apparently that wasn't a problem.
OVH is launching its dash for scale from third place. The first- and second-place competitors are truly formidable.
Pressure on IaaS and SaaS pricing from the hyperscale sector is likely to continue to be heavy for the foreseeable future.
OVH has historically been a winner in this environment, using scale and vertical integration to deliver low prices.
But the jump from No. 3 to Microsoft in No. 2 is a massive one, and are an expensive business.
This is doubly true given that AWS, Microsoft, OVH, Google, Rackspace, and IBM are all competing for the same developer/start-up/scale-up customer. It's hell out there…
A key issue will be whether the relative "pricing truce" of the last few years holds, or whether a another round of price slashing breaks out.
Another key issue will be whether its channel development can keep up with its international expansion. OVH has a standard modular data center design; it doesn't have a standard modular partner design, and of course no such thing exists.