Another selling point of bare-metal cloud providers: local service

Several things make bare-metal cloud providers appealing compared with traditional cloud providers, which operate in a virtualized environment. Bare-metal providers give users more control, more access to hardware, more performance, and the ability to pick their own operating environment.

There’s another interesting angle, as articulated by Martin Blythe, a research fellow with Gartner. He maintains that bare-metal providers appeal to small and mid-sized businesses (SMBs) because those companies are often small, local players, and SMBs looking for something more economical than hosting their own data center often want to keep the data center nearby.

“If you don’t want to maintain a data center in your downtown office block and don’t want to build something, these guys can provide it for you. You simply manage them remotely, and if you want to inspect the site, it is close to your headquarters,” Blythe said.

Why companies want their bare-metal provider to be nearby

Not surprisingly, there is a preference for firms to have their provider in the same state. In Europe, it’s even more important for several reasons. First, you have a lot of European companies throwing up borders around the internet in light of the NSA spying fallout from a few years back, particularly Germany. Microsoft responded by building data centers in Germany that would be for only German companies and government agencies.

Then there’s just good old provincialism, where a lot of French companies want French-speaking providers.

“It’s convenient having the company under the same umbrella as the host. And you own the stuff. You don’t have to worry about it going outside of your borders,” Blythe said.

This is not something you’d go to Amazon to do because even with that company’s numerous data centers, they don’t have the advantage of locality. Amazon does best where they offer virtual environments to large firms.

The challenge for market researchers such as Gartner is that these are medium-sized companies, and while they are growing, many are private, so it’s difficult to spot them and thus measure the market.

“They don’t really report anything we would find. We do talk to them but we can’t really scale them,” Blythe said.

Branded equipment also a selling point

There’s another interesting element to these local bare-metal hosts. Instead of using non-brand name equipment like Amazon and Google have done, they typically use branded equipment from Dell or HPE.

“Their customers are coming from using on-premises equipment, and they want to know they are running on brand-name servers,” Blythe said.