UpCloud — The Finnish Start-Up Taking On Amazon

Antti Vilpponen, general manager of Finnish infrastructure-as-a-service company UpCloud, talks about what it is like to take on the likes of Amazon and Microsoft.

How do you begin to compete against huge providers like Amazon or Microsoft?

Vilpponen: ‘The large cloud providers want you to believe that the cloud will become a commodity’

Since I strongly believe that the cloud infrastructure market is not a commodity, there are multiple niche areas where one can begin to build traction by adding value to markets that are underserved by the giants. Amazon and Microsoft need to generalize their offering in such a way that it adds value to the average customer. As we know, there is no average customer and everyone is needing to compromise in such a situation.

We took a step back and thought about the market in a completely new way. What kind of services and innovations do we need to offer to be able to win the trust of customers in a few attractive segments? There are customers who require high-performance, high-availability cloud computing services. AWS, Google and Microsoft have only recently added SSD storage to their offering. We have had it for over a year and half.

Did the Snowden revelations have any impact on sales both in Europe and in the U.S.?
They definitely did. U.S. companies have a lot more to prove with regards to privacy these days. Many governments require their data to be hosted inside the EU.

This also opened the eyes of many customers that if they sign an agreement with a U.S.-based company, the agreement is under U.S. legislation. The benefit of someone like UpCloud is that we abide primarily by Finnish legislation, which of course is guided by EU directives and principles.

We are only opening up business in the U.S. with our new data center in Chicago now, so we do not have concrete figures yet. However, if the discussions during the last 12 months are of any indication, being a European cloud hosting provider isn’t such a bad situation to be in.

But aren’t there also some downsides to doing business in the EU?
The real challenge in doing business in the EU is tied to the historical background of the Continent. It is not a single market and all countries have a different way of doing business. Many have different values in business and therefore a single model to take on Europe will not work. A certain level of localization is required and this is just the way it is. Being an entrepreneur, I don’t see it as a challenge — it is an opportunity that will, I hope, make us more capable of offering better value in these markets than our non-European competitors.

Why would a company come to Upcloud rather than one of the major players?
We’re not one of the largest cloud hosting companies around, but we have been able to launch innovations that the others have not. A good example of this is our MaxIOPS storage backend. In a recent comparison we found out that it performs up to 19 times faster than the fastest Amazon Web Services storage backend and costs only an eighth the price.

Based on discussions with our current customers, many choose us for one or more of the following reasons: competitive price, performance, high availability and privacy.

Is there a risk that cloud provision is simply going to be a commodity business, driving down margins?
The large cloud providers want you to believe that the cloud will become a commodity. This is because if it is seen as a commodity, they are able to compete with their commodity offerings. However, if you think about even coffee isn’t a commodity. The coffee culture we see in many large cities hasn’t been more alive. It’s booming. I believe this is a good analogy to cloud infrastructure. There are different tastes and requirements.

We strongly believe that the cloud infrastructure business is not going to commoditize and the hundreds and thousands of different kinds of requirements will keep it so. This is also one of the reasons we have gone ahead and created MaxIOPS. We believe there is a huge underserved market of customers who value high-performance storage backends. When you are able to innovate, you are also able to create value that customers cannot find elsewhere. For this, they thank you with more business.




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