Alternative clouds are having a moment. Nearly 75% of organizations are using two or more alternative cloud providers, according to a HostingAdvice.com survey of 500 IT leaders from May 2025. These alternative clouds refer to cloud providers outside the major hyperscalers, like Amazon Web Services, Microsoft Azure, Google Cloud Platform, Oracle Cloud, or IBM Cloud.

“You’re able to get enterprise-grade hosting from alternative cloud providers,” says Joe Warnimont, senior analyst at HostingAdvice.com. While hyperscalers still dominate in market share, alternative clouds are closing the functionality gap while delivering high availability and lower pricing.

Beyond cost, these newer cloud providers emphasize niche strengths. For example, Warnimont points to Vultr for edge computing and DigitalOcean for application development. Other examples of alternative clouds include Akamai Cloud (formerly Linode), Cloudflare, CloudJiffy, CoreWeave, Fly.io, IONOS, Lambda, NetExplorer, OVHcloud, Paperspace, Railway, Render, Scaleway, and Wasabi.

Enterprises are taking notice of these best-of-breed providers and making moves. “Organizations are rethinking an ‘all-in’ strategy with the big three cloud providers in favor of more diversified and specialized options,” says Kyle Campos, CTO at CloudBolt.

Cost drives the shift to alternative clouds

Why are more organizations turning to alternative cloud providers? Several factors are driving this shift, but cost remains the leading motivator.

“The big three cloud providers turned out to be way more expensive, about two-and-a-half to three times more, than organizations originally expected,” says David Linthicum, founder and lead researcher at Linthicum Research and author of InfoWorld’s Cloud Insider blog.

Rising prices continue to push enterprises toward alternatives. “Organizations are finding it hard to find value with the hyperscalers, and are looking for alternatives,” adds Linthicum.

A 2021 analysis from Andreessen Horowitz (a16z) argued that cloud repatriation could make financial sense at scale. Among 50 top public software companies studied, cloud infrastructure costs accounted for an estimated 50% of their average cost of goods sold.

Unforeseen costs commonly arise with data egress (moving data from the cloud to the edge). “The cost can be significantly impacting, especially for businesses with high volumes, like media distribution,” says Cyril Banos, transformation consulting director at Valiantys.

“Cost-sensitive workloads, such as e-commerce, that require reliability and performance but at a fraction of the cost of hyperscalers might turn to an alternative provider,” adds HostingAdvice.com’s Warnimont.

Other factors behind the shift

Cost isn’t the only motivator. Reducing dependency on hyperscaler vendors is a key influence, along with specialized performance needs, AI-specific demands, and data sovereignty or compliance requirements.

While hyperscalers brought scalable infrastructure to the masses, they’ve had to cater to the common denominator. “The hyperscalers have had to work with broad brush strokes while ignoring finer considerations,” says Umesh Maheshwari, chief scientist at LucidLink.

Some companies also prefer more control through a bare-metal setup. “Some just want to pay for capacity and facility management, as if they were having their own data center,” says Valiantys’ Banos.

For organizations frustrated by one-size-fits-all cloud platforms, alternative providers could offer a more tailored fit. “At the end of the day, teams want infrastructure that fits their needs, not the other way around,” adds CloudBolt’s Campos.

Where alternative clouds excel

Alternative clouds cater to gaps that the big three don’t fill all that well, from AI workloads, to edge computing, to specialized functionality or compliance requirements. “There’s a growing ecosystem of specialized cloud players making strong inroads,” says Campos.

The market has expanded tremendously in recent years to fill the gaps, with many smaller players catering to specific needs. So, let’s explore where these niche clouds shine, and how organizations are putting them to use.

AI workloads

Alternative clouds are increasingly attractive for AI workloads requiring GPU-powered compute. “GPUs as a service is a sound alternative given what the public cloud providers are charging for GPU-based virtual servers,” says Linthicum.

For example, the engineers at Stability AI, creators of Stable Diffusion, use CoreWeave’s Nvidia GPU infrastructure to scale their models. Several other so-called “neoclouds,” including Lambda and Paperspace, specialize in GPUs as a service.

Edge-grade performance

Certain niche clouds emphasize low-latency performance. For instance, CoreWeave, branded as an “AI hyperscaler,” claims to provide eight to 10 times faster container spin-up times and three to five times faster downloads than traditional providers.

This makes alternative clouds a strong fit for use cases like gaming and streaming as well as AI. For instance, Akamai Cloud is specifically designed for edge computing, leveraging Akamai’s distributed network to significantly reduce latency in those use cases.

Object storage at scale

Alternative clouds are also improving object storage services, taking advantage of blob storage for everything from backup and archiving to data analytics. “None of the hyperscalers provide a global file system that can match the responsiveness of a locally-mounted drive or a locally-networked file server,” adds LucidLink’s Maheshwari.

LucidLink, a global file storage platform for collaborators that behaves like a local file system, could be viewed as an alternative to public clouds. Like Wasabi, a cloud storage provider with 15 global regions, LucidLink touts the cost advantages of no fees for data egress.

Cloudflare, the content delivery network, is another example of an optimized alternative to the hyperscalers. “Cloudflare plays a role in our multi-cloud setup for data platforms, helping us reduce latency and lower costs tied to object storage,” says Campos.

Private clouds

Private cloud deployments have become cheaper and easier to manage. “Private clouds, such as those sold by VMware, are beginning to be more compelling,” says Linthicum, citing lower costs and simpler rollouts than a decade ago.

Campos agrees, noting that VMware-based workloads remain a common use case for alternative clouds. “OVHcloud has been key to our transition off physical data centers,” Campos says. “We use them for VMware hosting while still maintaining familiar infrastructure-as-a-service patterns.“

Digital sovereignty

The physical or geographical location of a cloud provider’s data center is a critical consideration for organizations doing business in regions with strict data privacy and data protection laws. “This impacts data residency, contributing to compliance with local regulations, such as GDPR in the EU,” says Banos.

To meet these needs, regional providers like Scaleway and OVHcloud offer sovereign hosting aligned with European standards. Another example is NetExplorer, a French sovereign cloud often used to store contracts and support due diligence workflows.

Outside France, regional clouds like Germany’s IONOS or India’s CloudJiffy are gaining traction. Ironically, even US-based hyperscalers are launching EU-based edge data centers, blurring the lines between standard public clouds and alternative deployments.

Startup-friendly

Some alternative clouds are more explicitly designed for modern, cloud-native developer experiences. These clouds, such as DigitalOcean, Fly.io, Railway, and Render, prioritize quick and streamlined deployments and hosting for developer-focused workloads, like full-stack web apps or web service APIs.

Other niche use cases

Alternative clouds might be designed for meeting sector-specific compliance requirements, including HIPAA, FedRAMP, or financial regulations. Experts share that other use cases include SAP hosting, finops-driven auto-scaling, and spreading risk across multiple infrastructure providers.

Where public clouds still triumph

Alternative clouds will not be replacing the hyperscalers anytime soon. For the time being, both have their roles to play in enterprise IT. “The cloud service market has matured to a stage where hyperscale and alternative cloud providers both compete and cooperate,” says Maheshwari.

Hyperscalers remain the go-to clouds for rapid scaling and volatile workloads. “If you change a great deal, need to scale up and scale down quickly, public clouds are typically a better solution,” says Linthicum.

The alternative clouds will have to work hard to prove they can compete on the same footing as hyperscalers, especially in terms of reliability and cybersecurity. The public clouds will continue to hold an advantage in certain cases.

“In general, the alternative cloud providers have to bear the burden of proving that they are reliable and worth the detour,” says Maheshwari. They must work harder to “sweeten their pot” relative to hyperscalers, he adds.

Maintaining multicloud parity

Enterprises have long used multiple clouds. Nearly four in five run workloads across three or more hyperscalers, according to Virtana. Today, multicloud is seen as a strategic advantage. Close to 90% of IT leaders say no organization should rely on a single provider, per HostingAdvice.com.

But adding alternative clouds introduces new complexity. “Tooling has matured, but you need the right people to manage integration between providers,” says Warnimont, acknowledging skill shortages for alternative cloud specialists in the market.

Effective multicloud management requires a consistent strategy and close monitoring of service-level agreements and performance, says Banos.

It also requires shared standards and tools for areas like provisioning, deployment, and change management. Many organizations accomplish this using cloud-agnostic GitOps workflows and portable standards like OpenTofu or OpenStack.

Kubernetes management platforms and multicloud platforms also play a role. “Use common control planes, such as common security and governance layers,” recommends Linthicum. Campos agrees, while emphasizing cost visibility and operational consistency.

The forecast looks alternative

Alternative clouds bring clear benefits. They help IT teams retain control, flex their core strengths, maximize performance, and secure sensitive data. Often at a major discount.

A March 2025 report by Anders Sundelina, Javier Gonzalez-Huertaa, and Krzysztof Wnuka of Sweden’s Blekinge University of Technology found that switching the same software architecture from a private cloud to a public cloud increased costs by 50%. This reflects industry consensus, too. OpenMetal reports a 20% to 60% savings when using on-demand private clouds over public hyperscalers.

While not all alternative clouds are “private,” the data suggests that public clouds are no longer the budget-friendly exit from on-premises data centers they once claimed to be. “The biggest gains we see are around cost, flexibility, and control,” says Campos. “Alternative cloud providers can offer increased flexibility and customization, regulatory alignment, and performance optimization.”

While cost is a driver, access to specialized technology is equally compelling for enterprises that want more control over their infrastructure. “Alternative clouds solve a very specific issue without a full commitment to a single cloud provider,” says Banos. “They allow you to leverage your internal tech expertise and retain control.”