Unlike hyperscalers, local data centers are usually 100% sovereign in both their technology and their shareholding, and primarily serve local or regional businesses. When they succeed, they attract the interest of foreign capital.
Data centers are infrastructures that secure data storage and processing. They are essential to the operation of digital services and the business activities that depend on them. They also strengthen the connectivity and sovereignty of the regions that host them, supporting the growth of services and sectors linked to digital transformation.
“Hyperscalers pursue economies of scale, offering ever more competitive prices as volumes increase”
There are two main families of data centers: hyperscalers and local data centers. They serve markets with different expectations and different business models. Hyperscalers are often American players serving international companies, first and foremost the GAFAM (Google, Apple, Facebook/Meta, Amazon and Microsoft), but also companies such as Oracle Cloud, Cloudflare or major e-commerce sites, whose power capacity needs are high.
“Hyperscaler customers also need a global footprint, with dozens of points of presence spread across a great many countries. They buy in bulk, purchasing dozens of megawatts all over the world. Hyperscalers, for their part, also pursue economies of scale, offering ever more competitive prices as volumes increase,” says Damien Desanti, Founder and CEO of PHOCEA DC.
Local data centers: sovereignty at their core
Local data centers, by contrast, are built on a sovereign basis. Their technology is most often French or European, as is their shareholding. They are smaller, very rarely exceeding 10 MW of power, while hyperscalers target more than 20 or 30 MW, with some going as high as 100 MW.
“Local data centers sometimes set up near business incubators, offering startups more services than a hyperscaler”
Most of the time, local data centers are located near medium-sized cities, whereas hyperscalers plug directly into the most powerful connectivity hubs. Local data centers serve local authorities, healthcare facilities, digital companies, telecom operators, managed service providers and young regional businesses: organizations that want their data stored close to them, rather than at the other end of France or, with less control, in the public cloud.
“Local data centers also sometimes set up near business incubators, offering the startups based there more services than a hyperscaler would. They may also be located as part of a regional policy promoting the most innovative companies, at the heart of economically and entrepreneurially dynamic districts,” comments Damien Desanti.
Local data centers: the profitability challenge
One of the first challenges local data centers face is achieving profitability. While a hyperscaler can easily find a few very large customers to quickly fill its data halls, a local data center has to convince around a hundred companies to trust it.
And when a local data center grows and succeeds, it quickly attracts the interest of larger players backed by foreign capital. “French company Data4, owned by Axa IM since 2018, was acquired by the Canadian multinational Brookfield Infrastructure in 2023. The overall transaction amounted to nearly €3.5 billion for around thirty data centers, which values each data center at more than €100 million. That is huge,” says Damien Desanti.
Another example of a flagship French data center company being bought by a player from across the Atlantic: the acquisition in 2023 of French company Euclyde and its six data centers (Sophia Antipolis, Lyon, Strasbourg, Besançon and Paris) by the American investment fund nLighten, for an undisclosed amount.
More flexibility in managing infrastructure with a local data center
“Major public cloud players such as AWS, Microsoft Azure and Google Cloud Platform have been hugely successful in recent years, but many companies are now moving away from them”
Finally, it is important to keep in mind that local data centers meet a growing need among companies to bring part of their IT infrastructure back in-house.
“Major public cloud players such as AWS, Microsoft Azure and Google Cloud Platform have been hugely successful in recent years, but many companies are now moving away from them. The reasons are simple: the high cost of these solutions and the technology lock-in they create. Companies are therefore increasingly choosing to bring part of their IT back on-premise, either in a server room on their own premises or in a local data center,” explains Damien Desanti.
Organizations can thus make smart use of both options (public cloud and on-premise) and achieve better cost ratios depending on their usage. “By placing part of their infrastructure on-premise, CIOs keep control over their OPEX spending and CAPEX investments, while managing their KPIs more precisely. There is also a drive to protect the sensitive data in their information systems by repatriating it to a sovereign on-premise environment,” concludes Damien Desanti.
Learn more about Phocea DC, a provider of sovereign, eco-responsible data centers. Phocea DC is based in Marseille. Its data center covers 1,700 m² with 1.2 MW of power. Compliant with the Tier III standard, it will combine reliability and energy efficiency. Its hosting services are designed for local and national organizations: local authorities, businesses, telecom operators and managed service providers.
