The Russian cloud services market accounts for barely one percent of the global cloud revenue. Nevertheless, international players periodically emerge, claiming their intention to compete for a share of the Russian market. What can we expect in 2019? Here’s the opinion of Konstantin Anisimov, CEO. .
In 2019, the Dutch company Leaseweb announced its intention to offer public and private cloud services, dedicated servers, colocation, content delivery networks (CDN), and information security in Russia. This is despite the presence of the largest international players here (Alibaba, Huawei, and IBM).
In 2018, the Russian cloud services market grew by 25% compared to 2017, reaching 68.4 billion rubles. Estimates for the IaaS (Infrastructure as a Service) market ranged from 12 to 16 billion rubles. In 2019, figures may range from 15 to 20 billion rubles, while the global IaaS market in 2018 was around $30 billion. Nearly half of the revenue came from Amazon. About 25% is held by the largest global players (Google, Microsoft, IBM, and Alibaba). The remaining share is attributed to independent international players.
The future starts today.
How promising is the cloud sector in Russian realities, and how can state protectionism help or hinder it? For example, government companies could be mandated to entirely abandon imported software solutions and equipment. On the other hand, such restrictions would hinder competition and place state companies at a disadvantage compared to commercial entities. Today, especially in fintech, competition occurs at the technology level. If, for instance, state banks have to choose not the best technological solutions, but only those that are domestically registered, any competing commercial bank will have no choice but to applaud and watch as market share is won effortlessly.
According to estimates The Russian cloud services market will grow by an average of 23% per year over the next few years and could reach 155 billion rubles by the end of 2022. Moreover, we are not only importing but also exporting cloud services. The share of foreign customers in the revenues of domestic cloud providers is 5.1%, or 2.4 billion rubles, in the SaaS segment. The revenue from the Infrastructure as a Service (IaaS) segment (servers, data storage, networks, cloud operating systems that clients use to deploy and run their own software solutions) accounted for 2.2% or 380 million rubles from foreign clients last year.
There are essentially two opposing concepts for the development of the Russian cloud services market. On one hand, there is isolationism and a course for complete import substitution of external services, while on the other, an open market and ambitions for global conquest. Which of these strategies has the greatest prospects in Russia? One hopes it is not just the first.
What are the arguments in favor of strict 'digital fences'? National security, protection of the domestic market from international expansion, and support for key local players. The example of China with Alibaba Cloud is well-known. The government makes considerable efforts to ensure that local players remain competitive within their own country.
However, the internal ambitions of Chinese companies are not limited to that, and their experience shows it is the most optimal strategy. Today, Alibaba Cloud is already the third largest in the world. Moreover, the Chinese are ambitious about unseating Amazon and Microsoft. In fact, we are witnessing the emergence of a 'big cloud trio.'
Russia in the Clouds
What are the chances for Russia to seriously and permanently appear on the global cloud map? The country has many talented programmers and companies capable of offering a competitive product. Recently, new players with serious ambitions, such as Rostelecom, Yandex, and Mail.ru, have joined the "cloud" race, possessing considerable technological potential. I expect that the real battle will not be between clouds per se, but between ecosystems. Here, it will not be so much about basic IaaS services as about the new generations of cloud services – microservices, edge computing, and serverless. After all, basic IaaS services have almost become a "commodity," and only numerous additional cloud services will allow us to closely bind users to them. The battlefield of this future struggle will be the Internet of Things, smart cities, and intelligent, and soon, even unmanned vehicles.
What competitive advantages can Russian companies offer, and do they have prospects? Considering that the Russian market is one of the few in the world that has not surrendered to the pressure of Google and Amazon, I believe there is hope. We possibly have one of the best price/quality ratios in education globally, our proximity to Western culture, the accumulated experience in conducting business, including international (after all, 30 years ago, such experience was virtually nonexistent), and the recent experience of creating world-class IT products (AmoCRM, Bitrix24, Veeam, Acronis, Dodo, Tinkoff, Cognitive – they are not so few anymore) – all these are advantages that can help us in global competition. The recent agreement between Yandex and Hyundai Motors on cooperation in the field of unmanned vehicles only adds confidence that Russian companies can and should compete for a significant piece of the global cloud "pie."
The situation with the "localization" of global IT services according to national legislation plays into the hands of Russian companies. National governments are not thrilled about the dominance of American services in their territories, and last year's record $5 billion fine against Google in Europe is a vivid confirmation of this. The European GDPR and Russia's "Personal Data Storage Law", for instance, now impose quite clear requirements on the location of user data storage. This means that local services gain certain advantages, and even relatively small players will be able to compete with global companies thanks to their flexibility, ability to form partnerships, adaptability, and speed. The main thing is to set such goals for themselves, to have ambitions not only to indefinitely "defend" themselves from global competition but also to actively participate in it.
What do I personally expect from the cloud services market in Russia and Europe in 2019?
The most fundamental and primary thing is that we will continue the consolidation of the market. And from this fact, two trends actually emerge.
The first is technological. Consolidation will allow leading players to focus more on developing and implementing new technologies in the cloud. In particular, my company is involved in the development of serverless computing technologies, and I know that we will see quite a few such projects in 2019 across various markets. The monopoly of the big three—Amazon, Google, and Microsoft—in providing serverless computing services will begin to crumble, and I hope Russian players will take part in this.
The second, and perhaps more important aspect, is that consolidation sets a clear focus on the customer. Market leaders achieve this very well, and to remain competitive, one must adhere to these trends. Modern clients require not only technologically advanced cloud services but also high-quality service delivery. Therefore, projects that manage to find a balance between profitability and the deep interests of their clients have a good chance of becoming successful. Personalization, convenience, and simplicity of the product are playing an increasingly key role. Cloud users want to understand the impact of the service on their business, the reasons for using it, and how to minimize time and costs. The underlying architecture of your product can be infinitely complex and technologically sophisticated, but the user experience must be as simple and seamless as possible. This trend is even appearing in 'heavy' corporate services, which have long been dominated by VMWare and other traditional players. They will obviously have to make room now. This is beneficial for both the industry and, most importantly, the clients.
Source: habr.com
