[Case Study] OVH main challenges and key differentiators
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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,
![[Case study] OVH main challenges and key differentiators
Houria TAIR- CHAUVIN
houria.tair@gmail.com
Sales, Marketing & Strategic adviser
for digital business transformations](https://image.slidesharecdn.com/ovhcasestudyslidesharefinal-171024095157/85/Case-Study-OVH-main-challenges-and-key-differentiators-1-320.jpg)
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[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.