There’s a funny thing in the technology industry. It seems that a company can be seeing great success and making lots of money, but unless that success includes market penetration in the US, it seems to count for nothing. It’s a somewhat weird attribute of the tech world that we equate the US market as the determinant of actual success, regardless how the other five billion or so people in the world regard a product.

We can see this in the lack of attention such massive brands such as WeChat and Alibaba get – despite serving far more customers than the total population of the US, they are somewhat forgotten in the rush to talk up the latest Silicon Valley darling (Juicero, anyone?)

I’ve been thinking about this trend recently given the news from OVH that they are ramping up their US business. Now if you’ve never heard of OVH (and, yes, that kind of proves my point), they’re a public cloud vendor that is a subsidiary of OVH Group, the largest European hosting provider. OVH services over a million customers across 138 countries served by 27 data centers, 33 points of presence, and thousands of miles of dark fiber.

But that wasn’t enough and the OVH leadership decided that what was really needed was success in the US. Despite a global addressable market of six billion, OVH decided that it would go into battle in the most competitive market. A market with only 320 million possible consumers. Weird.

And so OVH decided to buy the distressed assets of VMware’s own failed cloud initiative, vCloud Air. Bear in mind that VMware, a vendor with a far bigger footprint in the US than OVH, couldn’t make vCloud Air a commercial success and hence jettisoned it off. in a fit of Gallic pride, OVH decided that they could succeed where others have failed.

All herald the launch

OVH has re-badged VMware’s offering that it acquired back in April of this year and it is now called the “vCloud Air powered by OVH” product line. What that means in terms of product offerings is that OVH is going to offer disaster recovery, private cloud and hybrid offerings targeted to mid-sized and enterprise customers. OVH is suggesting it can differentiate based on application agility, cost savings, and retiring obsolete hardware.

But here’s the thing. Unlike other OVH offerings which are built upon OpenStack, and hence offer some of the economic advantages that open source brings, this portfolio is built upon VMware technology – not exactly the poster child for either low cost or agility. The fact that OVH is also suggesting that the fact that its products are built upon proprietary hardware and software is a little jarring – the world is so used to cloud vendors driving economies of scale through the use of commodity hardware and smart leveraging of open source software.

The war has already been won

I know it’s fashionable to bad mouth any new player and says that they’re crazy to even try to go head to head with the incumbents but, that. AWS, Microsoft and, to a lesser extent, Google have got the public cloud market sewn up in the US. Sure there are some edge use cases that have historically been able to justify a niche provider (regulated industries, for example) but seeing how much effort this triumvirate is putting into getting the tick of approval from the most discerning industries is an indication of just how tough a job OVH has in front of it.

It’s frustrating because, pretty much everywhere apart from the US, OVH has a really strong point of differentiation. What makes them decide to invest huge amounts of money in a market that is simply going to set themselves up for a bloodbath? Is it hubris? Arrogance? Or an analysis and commentary community that cannot see beyond US adoption numbers? Whatever it is, it’s a shame.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • One possibility is existing multi-national customers who want a US presence with the same vendor they use elsewhere.

    Not a big market, but if there’s demand from existing customers…?

  • The US market is the centre of spin. You need a foothold to access venture capital, talent, and presence. This is changing, but glacially. A lot of minds need to be changed, and that is at least generational. Underlying assumptions evaporate, yet beliefs persist and continue to drive the machinery.

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