The Guest Blog

Guest blog post Dr. Andreas Jüttner, Senior Legal Officer at the European Stability Mechanism (ESM).

On 28 February 2017 a typo at one of the leading US cloud providers took down a good chunk of the Internet, showing our dependency on few US providers. The IT industry is currently undergoing a paradigm shift, comparable to the shift from the local generation of electricity to central power plants at the beginning of the 20th century. Similar to how we get electricity today “out of the socket” we will obtain most of our compute and storage capacities from central data centres in the future. According to the IT consultancy Gartner, the market has consolidated around two leading providers: Amazon and Microsoft. No European provider is playing a role. Are we Europeans fine to become dependent on few US providers for such a critical infrastructure? Would we accept to not have own utility companies? Have we been willing to lose our capability to build planes and leave this to Boeing? Why don`t we repeat the Airbus success story and build a word-class cloud provider – Airbus 2.0 – giving the EU a new lighthouse project? A lighthouse project of huge economic importance, creating thousands of jobs and being hard to attack by populists.

 

Cloud Infrastructure as a Service (“I-Cloud”) is one of the most significant and disruptive paradigm shifts of 21st century information and communications technologies.

With I-Cloud, IT resources, such as compute and storage, no longer require upfront investment in physical assets on the premises of a business – they can be allocated and consumed on demand, in a utility based model. I-Cloud draws parallels to the developments of utility companies. In the 19th century, businesses and consumers had to produce their own electricity. In the 20th century, the power grid and central power plants became ubiquitous and today every business and household leverages central power plants, rather than producing their own electricity. Similarly, in the 21th century computing space, rather than maintaining servers on premises, with I-Cloud services, organisations can connect via the internet or direct connections to the computers of the cloud provider and consume and pay for IT much the same way that we do with electricity – plugging in, switching on and paying only for what we use.

The I-Cloud market is huge. According to Gartner, more than $1 trillion in IT spending will be directly or indirectly affected by the shift to the cloud during the next five years, and I-Cloud is the fastest-growing segment. The I-Cloud market has been growing more than 40 percent in revenue per year since 2011, and it is projected to continue to grow more than 25 percent per year through 2019.

Yet, the importance of I-Cloud does not only follow from these staggering numbers. It`s not only about money. I-Cloud will become a critical infrastructure similar important as electricity. Like we depend on utility companies to ensure our supply with electricity we will depend on I-Cloud providers to ensure our supply with IT resources (compute, storage etc.). On 28 February 2017 a typo at one of the leading I-Cloud providers took down a good chunk of the Internet, showing our dependency already today.

And who are those providers? According to Gartner, the I-Cloud market has consolidated significantly around two leading service providers, Amazon and Microsoft, and the future of other service providers is increasingly uncertain. Google might be able to catch-up. IBM already starts falling behind. In any case there are only US providers in the race. And the race is fast, with an incredible, exponentially growing pace of innovation. The market leader Amazon added 280 new capabilities daily in 2013; in 2016 it were 1000 new capabilities daily.

And Europe? Can the EU afford to not have an I-Cloud provider that is able to keep pace with the US providers and supply EU customers with such a critical infrastructure? Has the EU ever considered not having own utility companies for supplying EU businesses and consumers with electricity? Has the EU accepted losing its capability to build planes and leave this to Boeing?

When France, Germany and Britain established Airbus in 1969, with Spain joining few years later, they were acknowledging a simple truth: Without a joint programme of aircraft development and production Europe would be left trailing in the wake of the Americans, who dominated the industry – and, with the planned long-range 747 “jumbo” on the horizon, looked set to consolidate their supremacy. European firms would become little more than sub-contractors to American manufacturers. Hundreds of thousands of jobs could be at risk and European airlines would be dependent on the United States for new aircraft.

And the Europeans made the miracle happen, in a true European way, closely linked to the European integration process. In October 2016 Airbus delivered its 10,000th aircraft, has orders for close to 7,000 more, is outselling its US rival in the key single-aisle airliner segment and its future looks assured.

So why don`t we repeat the Airbus success story and build a world-class I-Cloud provider – Airbus 2.0 – giving the EU a new lighthouse project? A lighthouse project of huge economic importance, creating thousands of jobs and being hard to attack by populists.

 

References:

Gartner, Magic Quadrant for Cloud Infrastructure as a Service: https://www.gartner.com/doc/reprints?id=1-2G2O5FC&ct=150519&st=sb

Gartner: http://www.gartner.com/newsroom/id/3384720

Gartner: http://www.gartner.com/newsroom/id/3188817

Gartner: http://www.gartner.com/newsroom/id/3354117

CIO Today: http://www.cio-today.com/article/index.php?story_id=011000DNVA1W

The Guardian: https://www.theguardian.com/technology/2017/mar/01/amazon-web-services-outage-smart-homes

Computer Weekly: http://www.computerweekly.com/news/450404123/The-need-for-speed-Inside-the-cloud-innovation-engine-at-AWS

Airbus: http://www.airbus.com/company/history/the-narrative/early-days-1967-1969/

The Telegraph: http://www.telegraph.co.uk/business/2016/10/22/how-airbus-achieved-the-miracle-of———keeping-a-european-pr/

The Guardian/Süddeutsche Zeitung/Le Monde: https://www.theguardian.com/world/2017/jan/05/so-whats-the-big-idea-european-union

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