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Cloud providers & outsourcing driving AU data center demand, report says

25 Sep 17

Massive-scale cloud providers are driving demand in the Sydney and Melbourne data center markets, and the Australian market is seeing strong demand because local requirements are best served in-country and enterprises in the market are more outsource-friendly than in other Asia-Pacific markets. 

These are the main findings from Structure Research's recently released Australian data center research report.

The report reviews the Sydney and Melbourne colocation markets, tracking market size and growth trajectory and provides a five-year CAGR projection, along with a detailed analysis of the underlying supply and demand trends.

Structure Research’s proprietary methodology measures colocation supply from both a space and power perspective with the firm splitting the market between retail and wholesale colocation.

For both markets, the findings show that the retail-wholesale composition is quite similar: both regions have larger retail colocation markets but the directional trend is towards wholesale and the markets should be about evenly split by 2021.

Moreover, the report finds that growth trajectories and utilization rates of Sydney and Melbourne are also headed in a similar direction.

In 2016, Structure Research predicted that the Sydney colocation market would be worth US $360m, growing at 12% y/y in 2017.

On the other hand, in Melbourne, the research firm expected the market to be worth US $119m with a projected growth rate of 9% y/y.

Overall, the report finds that demand in the Melbourne and Sydney data center markets is driven by the massive-scale cloud providers.

In addition, other contributing factors to the nation’s growing colocation market is its unique geographic location and mature economy.

Microsoft and Amazon both have an established presence with Microsoft expanding rapidly. Google and Alibaba have also established data center footprints in Australia and are expected to grow at an accelerated pace for the next twelve months, the report states.

Key takeaways from the report include:

  • The Sydney colocation market generated an estimated US$380m (A$500m) in 2016 and is projected to grow 12% y/y in 2017.
  •  Structure Research projects the Sydney Colocation market will grow at 13% compound annual growth rate (CAGR) to US$700m (A$922m) by 2021.
  • The Structure Research report focuses specifically on the outsourced data center colocation services market and counts 33 colocation providers in Sydney, including providers with their own data centers as well as sizable resellers. Cumulatively, these providers sell colocation space in 42 operational data centers today.
  • Equinix and Global Switch are the top two data center providers in Sydney with a combined market share of 34% from a revenue generation standpoint. Other top data center providers in Sydney include Telstra, Fujitsu, Macquarie Telecom, Keppel DC REIT, NEXTDC, Digital Realty, DCI Data Centers and Vocus Communications.
  • There are two new data centers set to come online in the Sydney market in the 2017-2018 timeframe totaling 80 MW of potential critical IT load capacity.

The facts - according to Structure Research: 

The Sydney colocation data center market by the numbers:

  • Number of data center  providers (2016): 33
  • Number of unique operational data center (2016): 42
  • Total critical power capacity (2016): 140 MW
  • Total data center space (2016): 1.4 million square feet
  • Total rack capacity (2016): 40,000 racks/cabinets
  • Total 2016 colocation services revenue: US$380m (A$500m)
  • Total 2021 projected colocation services revenue: US$700m (A$922m) – 13% CAGR

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The Melbourne colocation data center market by the numbers:

  • Number of data center providers (2016): 23
  • Number of unique operational data centers (2016): 30
  • Total critical power capacity (2016): 57 MW
  • Total data center space (2016): 400,000 square feet
  • Total rack capacity (2016): 14,000 racks/cabinets
  • Total 2016 colocation services revenue: US$124m (A$163m)
  • Total 2021 projected colocation services revenue: US$255m (A$335m) – 16% CAGR

The report outlines the top international providers as Equinix, Global Switch, Fujitsu, Keppel DC REIT, Digital Realty Trust and DCI Data Centers.

It also names the top local Singapore providers as Telstra, Metronode, NEXTDC, Macquarie Telecom, AirTrunk and Vocus Communications.

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