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Few technologies have generated the attention that cloud services have over the past two years. While many organizations planned to invest in the cloud prior to the pandemic, Covid-19 and the need to support remote working, drastically accelerated cloud adoption.
In fact, research shows that 27% of global cloud decision makers made a significant increase in cloud spending during the Covid-19 pandemic.
However, as the maturity of the cloud computing market increases, more and more organizations are realizing that the big 3 public cloud vendors might not be the best option for their environments.
This was highlighted clearly in a new study released by Techstrong Research and Linode yesterday, which showed that while 93% of organizations use the top 3 cloud providers Amazon Web Services, Microsoft Azure, and Google Cloud Compute, almost two thirds are considering or are ready to buy from a trusted alternative cloud vendor.
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In other words, the bubble of the big 3 public cloud vendors is breaking, and enterprises are searching for more agile and cost-effective alternative cloud solutions.
What’s driving the appetite for the alternative cloud?
While alternative cloud providers like Linode can be traced all the way back to 2003, it is only in recent years that alternative cloud adoption picked up steam.
Over the past four years, adoption of alternative cloud solutions has almost doubled to the point where now 27 percent of organizations use an alternative cloud provider such as Akamai Linode or DigitalOcean, and OVHcloud,
Though there are many reasons for this increase in adoption, at a high level, organizations are turning to the alternative cloud to improve their operational agility, and to enable themselves to build multi-cloud environments that meet their exact business needs, rather than a “best fit” solution.
“The core benefits of the alternative public cloud are cost, performance, availability, security, agility for the organization. Some organizations struggle with the complexity of the hyperscale providers,” said Head of Cloud Experience for Akamai, Blair Lyon.
“So, in opting to go with an alternative cloud provider, benefits come with an “addition by subtraction” approach. Alternative cloud providers offer more simplicity of user interface, catalog, pricing, and a more manageable learning curve,” Lyon said.
The alternative cloud offers an avenue for enterprises to simplify their cloud infrastructure, while enabling developers to deploy and manage multi-cloud environments with access to open APIs.
At the same time, moving away from the big 3 cloud vendors also offers an increase in cost-efficiency.
“Pricing is less complex and is more affordable for an organization’s use case, and can often offer more or bundle services with the core offering that a hyper scale provider would not. Additionally, developers are looking for more flexibility in how they pay for their cloud services — Google Pay, Apple Pay, crypto, etc. — and the hyper scale providers are more rigid in their payment methods,” Lyon said.
The alternative cloud market
As the alternative cloud market matures, there are a number of key providers dominating, these include; Akamai Linode, Digital Ocean, and OVHcloud. One of the main competitors in the market is Linode, which Akamai Technologies Inc. announced it had acquired for $900 million at the start of this year.
Linod has carved out a position in the market as an alternative to AWS that provides organizations with access to Linux cloud resources with a full-featured API and cost-efficient pricing options. It also has over 1 million customers.
One of its main competitors, DigitalOcean, recently reported raising $127.3 million in revenue in the first quarter of 2022, an increase of 36% since last year.
DigitalOcean positions itself as “the developer cloud” and offers a range of solutions including scalable virtual machines, managed Kubernetes clusters and serverless computing solutions, designed to help developers develop applications more effectively.
OVHcloud also plays a key role in the market, offering a mix of bare metal cloud, hosted private cloud and public cloud services, providing enterprises with access to high-performance dedicated servers. OVHcloud recently announced it has raised €202 million ($203 million) in revenue in the third quarter of 2022.
The key difference between these offerings, and the solutions offered by AWS, Azure, and Google Cloud is that these solutions offer high performance at a lower price point. Making them a more cost effective solution for enterprise users.
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