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The size make-up of enterprises in an industry can vary from sector to sector. Take for example, the commercial aviation industry. When did you last fly in a commercial plane that was not a Boeing or an Airbus? This is an industry clearly dominated by two major companies.

Whereas the automotive industry is an example of a sector that in many countries, is mainly dominated by a few large Japanese and European brands but with enough room to accommodate a good number of smaller regional or national manufacturers. 

A similar make-up of a few, prominent international players alongside several local ones is common in industries worldwide – including public cloud.

From cloud competition to co-opetition

When I started working at VMware in 2014, the cloud market was on the cusp of rapid hyperscaler growth, with AWS leading the way in public cloud. In the following years, competitors like Microsoft Azure, Google Cloud, Oracle Cloud, Alibaba Cloud, and IBM Cloud began to catch up. Soon the public cloud market reached its peak and I remember how even high double-digit growth rates were considered ‘slow’. There was a lot of speculation then that hyperscalers would entirely take away market share from local and regional cloud providers. Looking at how the cloud services industry has evolved since then, it’s safe to say that nothing could be further from the truth.

Local, smaller-scale cloud providers have managed to compete with hyperscalers and continue to carve a niche for themselves.  They have found innovative ways to retain their customers by delivering unique and differentiated services.

These local cloud providers have also adopted a pragmatic approach in their own relationships with hyperscalers – while they may compete with them in certain segments, they are also open to partnering with them in others to deliver more value to customers. One could say cloud computing has reached the stage of ‘co-opetition’ – a term coined in the early 90s to define the trend of simultaneous competition and collaboration in the computer industry.

So, what are the unique benefits or ‘superpowers’ of these local cloud providers that help them compete with the mighty hyperscalers?

Ensuring data sovereignty

Managing sovereign and sensitive workloads is a use case where IT decision-makers may be better served by using a local cloud provider. With many organizations especially in highly regulated industries needing to comply with data sovereignty regulations, using public clouds can pose the risk of critical data being transferred across borders. Such organizations prefer to ‘go local’ with their cloud services. Local sovereign cloud providers can help an enterprise tap into the power of the cloud while meeting regulatory requirements around data residency and local jurisdictional control, with data being operated by certified staff, typically citizens with security clearance.

Enabling underserved locations

Nascent cloud adoption markets like Vietnam, Laos, Cambodia, and Myanmar have limited access to hyperscalers. Public cloud services may also not be feasible for businesses with specific or limited needs. Local cloud providers are ideally positioned to cater to the needs of these businesses and those in underserved locations. Even in markets where hyperscalers have only a single site or pod, local providers may be able to deliver geographically distributed, multi-site offerings that meet data compliance requirements and are also a great option for disaster recovery.

Tapping into local knowledge

Locally based cloud providers also have deep local market expertise to cater to the unique needs of organizations in the region. They can build and deploy highly bespoke solutions which the standardization and automation in hyperscaler platforms may not be able to support. Local cloud providers can thus unlock the power of in-country talent, which can contribute to the development of local communities and the economy.

Delivering quality post-sales support

Post-sales support is another great benefit of using local cloud providers. With service and support staff trained and based locally, they can investigate and resolve issues quickly and efficiently as and when they arise. The operational model of smaller-scale cloud providers can also make them more agile and responsive to customer needs than hyperscalers.  

Ultimately, an industry with a thriving ecosystem of cloud players of all sizes is good for customers as it enhances customer choice and flexibility.

Organizations benefit from large hyperscale platforms offering a breadth of services with global scalability that can help them boost revenue, reduce costs, and deliver exceptional customer value. At the same time, local, smaller-scale cloud providers offer services that are hyper localised and can be cost-effective compared to hyperscalers.

At VMware, we recognize this dynamic among our Cloud Service Providers within our Partner Connect Program. Our multi-cloud solutions are designed to help customers run the right workload on the right cloud based on their application requirements and unique business needs.

And our 4,500+ Cloud Service Providers are essential in enabling the multi-cloud journey for organizations.

In the cloud world, one size doesn’t fit all. Have you found the right cloud provider for your business?  

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