DataCenterNews Asia - Data center investment booming - and dramatically reshaping IT industry

Investment_growth.jpg

Data center investment booming - and dramatically reshaping IT industry

Leading cloud providers are investing ‘many billions of dollars’ in expanding their global network of hyperscale data centers in order to cope with worldwide cloud infrastructure spend growth of around 50% per year.

Synergy Research Group says the top four cloud providers alone now have some 110 data centers located in 20 countries, most of which are ‘huge’ facilities.

Synery is forecasting their data center growth to increase by 20% in the next 12 months, with that growth in addition to expanding the capacity of existing facilities.

The market research firm says it has also identified ‘well over’ US$25 billion in recent data center-oriented merger and acquisition deals, with specialists including Equinix, Digital Realty, NTT and IBM leading the charge.

Among the list of mergers and acquisitions highlighted by Synergy is Equinix’s proposed US$3.4 billion acquisition of Telecity Group, and TierPoint’s proposed acquisition of Windstream Data Centers for $0.6 billion, both still pending.

Synergy highlights five data center-oriented deals this year alone, including Digital Realty’s $1.9 billion purchase of Telx; NTT’s  $0.8 billion acquisition of e-shelter and Telstra’s $0.7 billion deal to buy Pacnet.

“The need to continually invest in expensive data center facilities is dramatically reshaping the IT industry,” Synergy says.

“Economics and new technologies are causing companies to radically change the way they choose to support their IT needs, which is driving consolidation and restructuring in the cloud and data center markets.”

John Dinsdale, Synergy Research Group chief analyst and research director, says end users are getting access to flexible and agile IT services they could only dram about a few years ago and CIOs are pulling back from buying and managing their own data centers.

“Why do something that is so difficult and so distracting when there are now much better options out there?,” Dinsdale says.

“It’s all change. Companies like AWS and Microsoft are now major players in enterprise IT; IBM is totally reinventing itself; companies like Equinix and NTT are amassing huge data center footprints; while HPE and Cisco are aggressively growing their cloud technology business units.”

Synergy says the impact of the changes can be seen in many places, including the static nature of spending on enterprise data center equipment at a time when service provider data center spending is booming.

The company says ODMs are growing market share and becoming an ever-more important feature of the vendor landscape.

It says the four leading cloud infrastructure service providers are all growing at rates far in excess of the market and are steadily gaining share in a very high-growth market; many of the largest global data center/colocation specialists are continuing to gain market share at the expense of their less focused rivals and some leading telcos are reconsidering their strategic option for their data center product lines due to the difficulty of investing enough money and focus on them.

“We do not expect the rate of change to lessen over the coming years,” Dinsdale adds.

Interested in this topic?
We can put you in touch with an expert.

Follow Us

Featured

next-story-thumb Scroll down to read: