Europe has a long and proud history of successful technological innovation and building strong companies and eco-systems. However, in the last decades, the centre of gravity in technological innovation has moved to the West and the East. Both the US and Asia have successfully built fast growing tech industries with strong innovation clusters and start-up friendly policies and support structures.
While European countries often rank high on innovation indices, they have been less successful in breeding globally leading technology companies, ecosystems and clusters.
In parallel, US and Asian companies have actively sought out attractive SMEs in the tech sector, including in Europe, acquiring leading edge technologies and assets to further strengthen their offerings and portfolios.
It is, however, possible for Europe to become a global leader without following the American or Asian models. There are already several young European SMEs offering cutting edge cloud technology solutions. Not seldom, new entrepreneurs have built leading companies in their respective fields through very strong links to European academia and research centres.
With the ongoing digitalization, edge cloud, networks and converged technologies are becoming the backbone of modern societies.
This is illustrated by the total number of mobile broadband subscriptions which has reached 6.2 billion and is expected to reach 8 billion by 2025. Moreover, subscriptions associated with smartphones account for more than 70% of all mobile subscriptions. In terms of 5G, a total of 2.6 billion 5G subscriptions are forecasted for 2025.
The cloud infrastructure already represents in 2021 a total of 11,098,973 front-facing servers. 74% companies are planning to move their IT workloads to the cloud and are demanding services which meet European values.
While there is a lot of talk about cloud sovereignty, current plans by governments in Europe as part of Gaia-X still rely on US technologies by AWS, Google and Microsoft which are subject to foreign surveillance (FISA) and tend to capture customer's value through overpricing. A European solutions for true technological independance is needed. There is an increasing demand for an integrated approach based on cloud technologies created by SMEs in Europe are innovative, extremely competitive but need to be further marketed.
Examples of use cases where Eureopan technologies can add significant value are:
No single player will be able to make it happen – there needs to be an ecosystem of different actors catering to different needs in the market and need to develop an environment in which both technology and business innovation is supported and encouraged.
Europe already has a number of successful and highly advanced SMEs within the cloud space, working on the next generation distributed edge cloud technology. This is a new breed of cloud technology providers, born in a edge-native era where software is at the centre of the business and open source and collaboration is part of the DNA. While they are small in size and individually address parts of the network, together, these European SMEs are, already today, in a position to supply and operate a full edge cloud platform from the "backend" at the datacenter (IaaS, PaaS) to the content delivery network (CDN) at the edge. More specifically, they can provide core virtualisation functions, operation support system core, IT automation core, secure elements and software defined networking (SDN).
If you bundle the products and capabilities of all of these players, these SME’s can jointly supply all components needed to build a full distributed edge cloud platform that is fully software based and runs on any PC hardware.
A fully software defined cloud infrastructure, also known as hyperconverged infrastructure, will soon be the industry standard in both edge, cloud and telecommunications, just like digitalization and virtualization have transformed other industries, such as media and music distribution. Software-defined infrastructures come with many advantages
Roughly reducing costs for building and operating a cloud infrastructure by 50%-80% from a TCO (total costs of ownership) perspective, implying a dramatic change in infrastructure-costs.
Significantly increasing the flexibility and ability to include components from different suppliers and open source applications and the opportunity to use the existing computing infrastructure much more effectively.
While proprietary hardware and public clouds from US or China are still used by the majority of entreprise IT, 45% orgnisations are looking for alternatives due to security concerns and 32% due to costs. The Virtual Private Server market is expected to grow to $8.3B by 2026. AI and Data Sciences are expected to reach $391B by 2025. Industry 4.0 already amounts for $72B in 2019. European cloud SMEs can already today offer technologies that radically bring down the cost of deploying and running a converged edge cloud infrastructure, making them available to all sectors of society. For example, the infratructure needs of the automotive and transport ecosystem for autonomous driving are diverse and complex, requiring a common cloud solution, rather than several single-segment solutions. The automotive industry is expected to be among the top four industries for AI-enabled cloud service providers in 2030.
An added benefit of building an even stronger European eco-system of cloud hardware/software/service providers is the possibility for increased diversity in the supply chain for operators. Over time this will increase resilience and independence of the increasingly critical cloud infrastructures in Europe.
Investment in European tech continued to grow in 2019, whereas the US and Asia saw a decline after record levels of investment in 2018. Yet, the volume in capital invested in the US is still around 3.4 times the level of investment in Europe for 2019.
Capital invested in European tech in 2019 amounted to 31.2B EUR, a number that has increased by 124% the last five years and by 39% since 2018
Last year showed an unprecedented interest from US investors in Europe. US investors are more active in terms of their activity in the region, as well as in spending an increased amount of time on the ground, building their European network and dealflow.
In 2019, one in five rounds raised in Europe involved the participation of at least one US or Asian investor. Thus, the share of rounds with at least one US or Asian investor participating have increased to 21% 2019, up from just 10% in 2015.
When it comes to US and Asian investors, they have been crucial for raising large-scale funding rounds of more than 91.2B EUR ($100B on exchange rate 0.912) in Europe. Last year, 90% of all rounds of at least 91.2B EUR involved the participation of at least one US or Asian investor.
Throughout Europe, there is a rising trend of SMEs being acquired by non-European companies.
For example, in Germany, domestic acquirers have traditionally dominated but that could be changing. Since 2013 the activity of foreign investors have picked up noticeably. This new trend is apparent when looking at foreign investors’ share in M&A transactions in the SME sector, which in 2017 reached 49%. Between 2013 and 2017 there was a 19% increase in the number of M&A deals with an acquirer from outside Germany