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Global demand for data centers fuelling infrastructure market

By Shannon Williams
Tue 6 Dec 2016
FYI, this story is more than a year old

Large scale investments by global organisations are set to fuel growth within the APAC region, as the global data center network infrastructure market is expected to grow by 5% during 2016-2020.

That’s according to the latest report from Technavio, which lists Arista Networks, Brocade, Cisco, Juniper, HPE and Dell as leading vendors.

“Increase in the implementation of software-defined networking and network function virtualisation solutions will have a significant impact on the adoption of network infrastructure among data centers worldwide,” says Abhishek Sharma,  lead data center research expert from Technavio.

In 2015, with a market share of over 47%, the Americas dominated the global data center network infrastructure market, followed by EMEA with over 28%, and APAC with 24%.

APAC: large scale investments by global organisations to fuel growth

According to the report, the significance of data center operations among large enterprises and government agencies in countries across APAC is rising.

A few data centers are already being operated by CSPs and colocation vendors, it says.

“Telecommunications vendors such as NTT and China Telecom and certain global IT service organisations operate most the data centers in the region. Many European data center providers are also considering Asia as a location after the UK's exit from EU,” it adds.

“If that happens, it will be a big boost to the APAC market.”

In APAC, Singapore, India, Japan, China, and Australia are leading in terms of data center investment, the report found.

Global organisations are also investing in millions of dollars in constructing data centers in APAC. Cloud service providers such as Amazon Web Service and Microsoft have recently opened data centers in India and are already operating facilities across APAC such as Singapore.

In addition, colocation providers are also expanding their footprint in APAC to cater to the customer demand.

In terms of technology, adoption of NFV among service providers and SDN among enterprise will see a considerable increase during the forecast period.

“With most of the data centers becoming software-defined and NFV-enabled facilities, these technologies will lead to higher revenue generation through the adoption of high-performance network infrastructure,” says Abhishek.

Americas: largest market for data center network infrastructure

In the Americas, the US leads the spending on data centers, however over the past two years, the construction of new data centers has decreased in the country. Investment in data center construction has grown with additional investment in renewable energy sources for data center operations. Most of the data centers in operation in the US are owned by global CSPs, colocation and managed hosting services vendors, and telecommunication organizations.

In Canada and Latin America, the number of data centers is growing, with most of the mega data center projects in these regions being carried out by global CSPs, and colocation and telecommunication vendors.

EMEA: increased construction of data centers in GCC and Africa to boost growth

Western Europe has a strong presence in colocation and managed hosting data centers. Companies such as Daimler, BMW, and Audi, along with telecommunication providers such as British Telecom and Deutsche Telekom, and CSPs such as Google and Microsoftoperate a few large data centers in the region. The customer base for CSPs and colocation vendors is growing rapidly with the growing adoption of cloud-based services by SMEs.

Apart from Western Europe, the Gulf Cooperation Council (GCC) countries are also experiencing increased construction of data centers with the growing number of smart cities and enterprises. In Africa, the telecommunication operators have shown great interest in the construction of data centers across the country. Many telecommunication operators are also involved in laying submarine cables to improve connectivity across the region.

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