Blog

Cloud Expo Europe in Frankfurt showcases expansion trends but also digital hurdles to single market

Julian Fitz – 16 Dec, 2016 – European Perspective

A visit to the recent Cloud Expo Europe in Frankfurt showcases the most fascinating aspect of the data-driven industry: its ongoing and rapid growth. Not only did the number of exhibitors and visitors double in comparison with last year’s edition, but many of the exhibiting companies also have expansion projects in the pipeline, with several businesses announcing investments in new data centers.

As the German counterpart to the London-based Cloud Expo Europe – which is both older and much larger than its smaller namesake in Frankfurt – the show attracts mainly German exhibitors and visitors. About two thirds of the almost 140 exhibitors were German, underlining Germany’s growing digital sector’s development. Four companies preselected and met by OCO staff confirmed that they had current or upcoming plans to expand or construct new data centers. For now these projects are mostly domestic or regional in nature, but demand from the client side is certainly growing. The sentiment shared among most exhibitors was that data centers will have to be expanded at a rapid pace to keep up with the ongoing growth of the demand side.

The growing importance of the sector as well as Germany’s potential as a source market for investments has attracted several European countries to this year’s edition of Cloud Expo Europe. Among OCO’s clients FinPro and Cinia, for both of whom OCO had scheduled meetings with prospective clients or expanding companies, Sweden and Iceland also had strong showings at the Expo, the latter even inviting visitors to their booth with authentic Viking Vodka from the North Atlantic.

Despite Europe’s digital economy being highly decentralized and generally integrated beyond national borders the cloud-based industry still seems to be the subject of trade and investment barriers uncommon to most other economic activities within the EU. Many jurisdictions – most prominently Germany – require companies to host the bulk of the data and other personalized content within national borders. This often seems to cause a headache for data hosting companies that are driven by economic realities much like other businesses. Despite some jurisdictions having much more favorable conditions for data hosting, including more affordable and abundant hydro power or a cooler climate, reducing the need for expensive cooling, these artificial restrictions on the European Free Market increase prices for clients in the end. Even though the majority of Germans tend to be conservative in the field of data security, this security may be provided just as well in another location within the Union. Applying the rule for data storage to other sectors outlines the issue in a much more relatable way: if we were to insist that a car’s brakes, certainly one of the most critical components of the vehicle, should be manufactured domestically in every EU country, the price of automobiles for the end customer would increase with no immediate effect on car safety. To the contrary, as more and more brake components used in German cars are being manufactured in Hungary, Slovakia or the Czech Republic the overall number of accidents coincidentally happens to have decreased over the last decade.

With Data hosting for cloud solutions being treated in a similar way within the single market countries with a stronger and more competitive offer could easily specialize in this field and offer the end customer a reliable, safe and certainly cost-effective solution. In the meantime it is the job of agencies and OCO-clients such as FinPro to overcome these obstacles and support German data center operators with a competitive and not less secure location option.