Posts Tagged ‘data center capacity’

Asia – the Wild, Wild West of Opportunity

Thursday, July 11th, 2013

As I led Global Data Center Strategy and Development for Yahoo!—a position that I immensely enjoyed and would love to do again—I developed, sought out and negotiated data center capacity in over 20 counties. And of all the regions, Asia was by far the most challenging to find large blocks of good quality data center capacity. I spent much time looking for data center capacity to lease in Hong Kong, Taiwan, Singapore, Japan, Korea, and India. (China was a separate entity.) I have taken countless trips to Asia since 2004, and during my tenure at Yahoo!, I traveled to Asia every month (as well as elsewhere).

Due to this limited supply of high-quality data center capacity, I was willing to take down futures on good quality data centers to be built in Asia, especially those with network neutral connectivity, which can be difficult to find in many Asian countries due to limited access to cross-country networks except by incumbent network providers. My counterparts at Google and I were almost always rushing to get into the available data centers in these regions before each other, so I was always so surprised that the US data center providers were not rushing to build strategic capacity in Asia to take advantage of these business opportunities.

Although data center capacity in Asia has been continually added faster than probably any other global region, demand still persists for good-quality, network-neutral data centers throughout Asia. This is evidenced by correlation to network growth mentioned in this statement about Equinix expanding in Osaka: “Osaka is Japan’s second largest economy after Tokyo and saw internet traffic grow a staggering 68 percent and bandwidth increase at a compound annual growth rate (CAGR) of 56 percent from 2008 to 2012 rivaling Tokyo.” http://www.datacenterknowledge.com/archives/2013/07/09/equinix-plans-data-center-in-osaka-cloudsigma-begins-deploying-across-its-footprint/

In large, mature and well-developed markets such as Osaka, intrinsic organic market demand doesn’t grow by 56% CAGR, so this indicates to me that there is likely unmeant demand finally being absorbed by new capacity. I believe that the same is true for other recent data center expansions in Asia by Equinix, Digital Realty Trust, and others.

Other locations, particularly Brazil and Mexico, have also been seeing tremendous growth that has been fairly unmeant by high-quality US data center providers. This has also been a challenge for other global locations. So even though US and non-US data center providers have been adding capacity and finally expanding into new global markets, it isn’t enough to have met and continue to meet new demand in these non-US markets.

It’s well beyond time for US data center providers to change their US-centric focus on US locations and take advantages of the many opportunities outside of the US, which can not only provide excellent revenue and margin growth, but also benefits of customer retention and new customer acquisitions, as well as network interconnectivity and market share dominance. All of these being immensely valuable in a much more competitive and global marketplace than it was even just a year ago. It’s time to smartly expand globally to gain many great advantages and cease the ultra-conservative approach that misses market share, revenue and margin growth opportunities for high-quality data center providers.

I hope that I can help guide some of these providers with these new opportunities and also the end-users find the best providers in these growing data center locations. Growth opportunities are nearly boundless in this global market. Now get out there and grow!