French sovereign wealth fund invests in two local cloud-computing providers

The French government is so keen to encourage the development of cloud computing infrastructure in France that it is investing in two competing home-grown cloud providers through its sovereign wealth fund, the Caisse des Dépôts.

The two companies, Numergy and Cloudwatt, are each backed by a French mobile phone operator and a French IT vendor with strong government links, and both promise to keep their customers' data and applications secure -- in France.

That local link is a strong sales argument with European cloud customers, many of whom are wary of handing their data to companies under other legal jurisdictions, particularly to companies based in the U.S. that may be subject to the Patriot Act's provisions for government access to data.

The first of the new cloud providers, Numergy, is owned by French mobile phone operator SFR, servers and services vendor Bull, and the Caisse des Dépôts, and launched its service Wednesday using infrastructure belonging to its parent companies. It started life with two datacenters and aims to build 40 more, all in France, over the next eight years, CEO Philippe Tavernier told Les Echos, a local business daily newspaper. Although it will initially target French customers, it has pan-European ambitions.

Numergy offers three levels of service, all based on virtual servers with from one to four virtual CPUs and 2GB to 16GB of RAM. The "Start" service guarantees 99.7 percent uptime (a maximum of 130 minutes of downtime each month) and a 10Mbps Internet connection; Entreprise offers 99.9 percent uptime (no more than 43 minutes of downtime per month) and a 20Mbps connection, and Critique offers 99.99 percent uptime (no more than four minutes offline each month) and a 50Mbps connection.

The company said it offered real-time cost tracking so that there would be no surprises at the end of the month -- but it has not yet published a pricelist.

The other new cloud provider, Cloudwatt, launched Thursday with the backing of France Télécom-Orange, which owns 44.44 percent; defense IT contractor Thales Group (22.22 percent) and the Caisse des Dépôts (33.33 percent), for a total investment of ¬225 million (US$283 million), the same as for Numergy. The French government's stake in the new cloud companies goes beyond the direct holding of its sovereign wealth fund, though, as it also owns direct or indirect minority stakes in the four other investors.

Numergy's early launch caught Cloudwatt off balance: It has no product offering yet, and no management team, although the shareholders have nominated Patrick Starck, a former director of Hewlett-Packard, Compaq and CA Technologies, as chairman.

Cloudwatt's ambitions are a little broader than Numergy's: While it too will begin with datacenters in France, it also plans to build them elsewhere in Europe in time. Shareholder France Télécom-Orange will give it the power to do that: While SFR is based firmly in France, Orange also operates networks in the U.K., Spain, Poland and elsewhere.

Where data is hosted is of increasing concern to European customers.

When Fujitsu launched its cloud computing service in France in July, it made much of the fact that it is out of reach of the Patriot Act -- and similar legislation in other countries -- because its servers are in Germany and it is headquartered in Japan, according to Daphné Alécian, marketing director at Fujitsu France. It did that because customers were worried about the issue, she said.

A study by law firm Hogan Lovells published in May found that courts in Australia, Canada, Denmark, France, Ireland, Spain, the U.K. and the U.S. can all require companies based there to disclose data held in other countries, while those in Japan and Germany also require legal cooperation from the government of the country where the data is hosted.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

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