Bigger is better when it comes to running a colocation data center services business. Large multinational customers prefer a provider that can give them infrastructure at national or global scale.

Cloud providers and other tech companies with hyperscale Internet platforms have completely changed the dynamics of the data center services market in recent years.

The biggest data center providers are already enjoying a seller's market as a result of an ongoing data center land grab by the hyperscale cloud giants, and many of them also have enterprise market strategies, chasing on-premise deployments by enterprise IT shops and in most cases offering customers the opportunity to combine their private infrastructure with access to public cloud providers from the same campus.

As the last several years have shown, bigger is better when it comes to running a colocation data center services business. Large multinational customers prefer a provider that can give them infrastructure at national or global scale. The biggest companies in retail and wholesale data center markets have further secured their dominance by acquiring hefty rivals, and there has been a wave of consolidation in secondary markets, as smaller players seek to scale in order to compete. Wholesale market growth now outpaces growth in retail colocation, according to a recent report by Structure Research.

Virtualization and cloud continue to define the market dynamics as far as adoption of data centers is concerned. The aggregate amount of global cloud shift in 2016 is estimated by Gartner to reach USD 111 billion, increasing to USD 216 billion in 2020.

IDC estimates that cloud providers will spend USD 23 billion on data center hardware this year, while public cloud providers are projected to increase their annual data center hardware spend by close to 19 percent. Also growing is spending on hardware to build on-premise private clouds. And this year, it is expected to increase by more than 10 percent. About 60 percent of the total will account for on-premise private cloud deployments. Public cloud providers will accelerate spending on data center hardware (servers, storage, and Ethernet switches), while spending on IT gear for traditional on-premise enterprise data centers will decline slightly. The forecasts are good news for the data center provider industry. Both the projected 19 percent uptick in public cloud hardware spending and 10 percent in private cloud hardware spending translate into more demand for global data center capacity.

Ten Largest Data Center Providers in the World

Five Largest Wholesale Data Center Providers

Digital Realty is the largest with a 20.5 percent market share in 2016, about equal to the combined market share of the rest of the top five providers in the category. With a global footprint, robust colocation services, and a connected data center ecosystem, it future-proofs the customer's IT strategies. It supports the data center colocation and interconnection strategies of more than 2000 firms across its secure, network-rich portfolio of 156 data centers located across 11 countries in North America, Europe, Asia, and Australia. Digital Realty's clients include domestic and international companies of all sizes, ranging from financial services, cloud, and information technology services to manufacturing, energy, gaming, life sciences, and consumer products.

Data-Center

Established in 1998, Global Switch has built a reputation for creating data centers that set new standards in scale, resilience, and connectivity. The company currently owns and operates ten data centers centrally located in Tier-1 cities across Europe and Asia-Pacific, offering a total of 300,000 sq. m of world-class technical space with further developments underway. Global Switch is a high-credit-rated data center provider, with investment-grade ratings from Fitch, Moody's, and Standard and Poor's.

It has recently announced the introduction of a new strategic investor, Elegant Jubilee Limited, which will support its expansion, in particular by accessing the fast-growing telecommunications and Internet provider customers to support their growth outside of China. The consortium, comprised of high-quality, private sector Chinese corporate and institutional investors, has made a strategic investment in Global Switch to give them joint control of the company alongside the existing sole shareholder, Aldersgate Investments Limited, a Reuben Brothers company. The consortium is paying cash consideration of 2.4 billion for the 49 percent stake.

Global Switch has also announced major customer pre-commitments in Hong Kong and Singapore, tangibly illustrating the benefits of the transaction and the scope for future growth. For these pre-commitments, China Telecom Global will, upon construction completion, become the end customer in Hong Kong and Singapore through direct service agreements with Daily-Tech. These pre-commitments are among the largest customer commitments made in the global data center industry and will provide further asset and revenue diversification for Global Switch.

As the first of these pre-commitments, Global Switch has already begun construction of its new 100 MVA world-class data center in Hong Kong, located on the Tseung Kwan O (TKO) Science and Technology Park. Completion of the first stage is targeted for mid-2017 with further stages coming onto the market progressively. Once all stages are complete, the data center will become the largest carrier-neutral data center in Hong Kong.

Data-Center

In a second substantial pre-commitment, Daily-Tech will become, upon construction completion, Global Switch's first major customer at its new 40 MVA Global Switch data center in Singapore. China Telecom Global will become the first end customer of Daily-Tech. Global Switch has also entered into a joint venture with Daily-Tech to develop a new data center in Shanghai, which will be available to meet the data center needs of Global Switch's customers within the next 24 months.

DuPont Fabros Technology, Inc. is a leading owner, developer, operator, and manager of enterprise-class, carrier-neutral, large multi-tenant wholesale data center. The company's facilities are designed to offer highly specialized, efficient, and safe computing environments in a low-cost operating model. Its customers outsource their mission-critical applications and include national and international enterprises across numerous industries, such as technology, Internet content providers, media, communications, cloud-based, healthcare, and financial services. The company's 11 data centers are located in three major US markets, which total 3.3 million gross sq. ft. and 287 MW of available critical load to power the servers and computing equipment of its customers. DuPont Fabros Technology is a real estate investment trust (REIT) headquartered in Washington, DC.

CyrusOne offers a portfolio of more than 30 data centers across the US, Europe, and Asia, with over 3 million sq. ft. of total net rentable square footage. Currently, it serves more than 945 customers and more than 175 of Fortune 1000 customers worldwide.

China Telecom IDC service has a long history in China IDC industry 5-star standard setters. It has over 260 seats and relies on the stability of the global network environment for global customers to provide safe, reliable, and stable IDC services and solutions.

Five Largest Retail Colocation Data Center Providers

Equinix has a market share of 10.5 percent. This Redwood City, California-based player is the biggest in the retail colocation market, almost double that of the second-largest provider in the space, China Telecom.

With 145+ colocation facilities on five continents, Equinix puts companies in the heart of the world's pre-eminent business markets – be they financial centers, manufacturing hubs, tech industry hotspots, or gateways to emerging economies. Its facilities house data centers for 8000+ companies worldwide. IBX facilities offer the broadest geographical reach, the largest choice in networks, and the most efficient connectivity options for companies looking to lease data center space. Its colocation services are backed by round-the-clock on-site technical support, world-class physical security, and >99.99999 percent average uptime.

Shanghai China Telecom is located in Shanghai, China, and the colocation data center is carrier neutral.

China Unicom provides full suite of one-stop IDC and ICT services as well as cross-border and global communications solutions for corporate and carrier clients through its IDC in Hong Kong and Mainland China.

The company is investing in a new infrastructure, China Unicom (Hong Kong) Global Center in Hong Kong. Its area covers about 14,900 sq. m, with a construction area about 37,000 sq. m. It is equipped with 4000 data racks, and the service level has reached the international Tier III+ level. Through the multi-routing, large capacity "Suigang Land Cable Transmission System", the Global Center is able to connect to the backbone network within Mainland China. Through Asia-America Gateway (AAG) Cable System, Asia-Pacific Gateway (APG), Asia-Africa-Europe-1 (AEE-1), and other submarine cable systems, it seamlessly links up to North America, South-East Asia, Middle-East, Europe, Africa, and other areas.

Established in 1989, Telehouse became Europe's first purpose-built, neutral data center provider by opening its famous London data center Telehouse North. Headquartered in London, UK, Telehouse has since grown to become one of the largest global data center providers, operating a network of 48 data centers in 24 strategic locations in the EMEA, the Americas, and the Asia-Pacific region that cover all major commercial and financial hubs, meaning that one is never too far from its premium data centers. Within the EMEA, Telehouse operates through 14 premium colocation facilities with staff working 24/7.

NTT Communications houses state-of-the-art data centers for global business. Its 140 centers across the world with a total server space of over 350,000 sq. m are fully featured and highly scalable.

The Indian Market

Currently valued at USD 2.2 billion, India's data center infrastructure market is expected to touch USD 4.5 billion by 2018. India is poised to be the second-largest market for data centers in Asia-Pacific by 2020 and the investments are expected to reach USD 7 billion, according to an Internet and Mobile Association of India (IAMAI) report.

"India can grow to an infrastructure hub attracting USD 7 billion or 4.5 percent of the world's investments by 2020 and there is an urgent need to create appropriate incentives to attract investments and enable better connectivity, data speed, and create more jobs in the country," says the report. It strongly challenges mandatory data localization norms which would reduce competitiveness and have a deterring impact on the GDP, driving away India's extensive ability to attract data center investments.

The growing cloud market in India, at a CAGR of 32 percent over the years 2016–2018 is determining an upward demand for data centers. The Indian public cloud services market at USD 1.26 billion in 2016, receiving its impetus from Digital India projects is projected to reach USD 4 billion by 2020.

International tech companies are monitoring the expanding Indian market. Companies such as Microsoft and Amazon Web Services have already consolidated their presence in India, establishing data centers in the country. With expansion in 3G and 4G services, this could be the only way forward left for enterprises in India.


 

 

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