The Changing Data Centre Landscape in APAC

Saravanan Govindan

Associate, BroadGroup

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TMT Finance & Investment SeriesMiddle East 2009Asia 2009

Finance & Investment Forum for DataCentres – London 3 December 2009

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DATA CENTRES TMT FINANCE

INFRASTRUCTURE CLOUD

DATA CENTRE TRENDS

• Significant growth is expected - Data Centres continue in expansion mode through 2015

• Supply of data centre space has lagged demand growth across all 5 markets of Singapore, Malaysia, Thailand, Indonesia and Vietnam

• This has led to the rush in data centre developments

• Disaster recovery and business continuity services are rapidly growing areas of data centre services. These services have become crucial to both governments and corporations as threats from terrorism and natural calamities are considered increasingly likely

• Regional partnerships will increase in size and number: Customers have presence across multiple markets in South East Asia. Data centres will follow their customers through collaborative partnerships

• Older stock – too small/not compliant with enterprise CSR requirements – can’t compete

• Further consolidation likely

• Winners will own pan-Asian data centre networks – those in position to acquire/adapt buildings/build in strategic locations should do so in next 12-24 months

PAN ASIAN DATA CENTRES – ACHIEVING SCALE

6 countries/9 data centres Colocation/Managed Services

4 countries/10 data centres Colocation/Managed Services 35 Data Centre Alliances across Asia/Europe/N America

Greater China/10 data centres Colocation/Managed Hosting

Asia/N America/Europe - 27 data centres Colocation/Managed Services

International Data Centre Players

SUSTAINED INVESTMENT IN ASIA

New Internet Data Centre in Singapore and the TGN-Intra Asia Cable US$480m

Super IDC in Asia part of AT&T’s US$1 billion planned global network investment

"Asia-Pacific Information Engine" Announced for Guangzhou (China Telecom & Guangzhou Tianhe Software Park) investment of 400 million Yuan 16,000 sq.m Data Centre

DATA CENTRE VALUE CHAIN – FOR THE ENTERPRISE

OUT

SOURCING

DISASTER RECOVERY

MANAGED SERVICES

STORAGE

MANAGED HOSTING

COLOCATION

Movement occurring up and downthe value chain as Enterprise requirements change

Massive increase in Data – video / new media / transactionsStorage requirementsDR/BC Compliance and New Regulation (more to come...)More complex softwarePower costs (40-60% of OPEX)Core competency of business Risk of obsolescence in equipment investmentCorporate Social Responsibility requirementsCarbon efficiencyUpgradeability of enterprise data centre

Cost, cost, cost...

DATA CENTRE AND THE ENTERPRISE

CRITICAL CHALLENGES

What is Real Data Centre Lifecycle? Built with current technology? – investors and operators use 15-20 years

Product obsolescence? Will new Products such as “Data Centres in a Box”/mobile data centres causeobsolescence?Will new technologies commercialize soon –Eg Nano cooling?

Core competency/Opportunity Should enterprises own and manage Data Centres?– many concluded to outsource already... But many still have not

QUESTIONS FOR THE ENTERPRISE

DEMAND ESCALATES

As demand requirements in Asia escalate – same problems will replicate across the region that have already occurred in Europe and US

OPERATIONAL PROBLEMS

Data centre power consumption and huge source of carbon emissions

Power costs traditionally shared across business units – shift as cost of running data centresaccelerates

Even with efficiency improvements, enterprises face potential legislative penalties (US and Europe) – fear

In US -- projected quadruplingdata centre carbon emissions by 2020

OUTCOMES

Data Centre cost as percent of total revenue all time high

In some cases Data Centre cost growing twice as rapidly as revenue

Data Centre construction investment now significantly affects profitability for next two years

Data centre facilities spend (CapEx and OpEx) is arguably inefficient portion of IT spend –impact on profitability.

IMPACT OF DEMAND

BANKS/FINANCIAL SERVICES

Data growth (Banks seeing 50-100% annual growth in data requirements)

Compliance and regulation (Sarbanes Oxley, Basel II, MiFID, + more to come

Increased willingness to part or whollyOutsource to 3rd party operators

Requirements – security, redundancy,DR/BC

VERTICALS

NEW DEMAND SEGMENTS

Media

Government

Broader Corporates

STANDARDS DRIVEN

STANDARDS

BS25999SS507SOAISO – DATA CENTRE (Coming soon)

SURGE IN USER DEMAND

Greater usage of broadband andInternet ( fuelled by consumer demand for Internet servicesYahoo!, eBay, Amazon.com, Google, PayPal, iTunes, MySpace, YouTube, Skype, Facebook, WiFi, 3G etc....)

BROADBAND DEMAND

IP Traffic should nearly double every two years through to 2011 with consumer IP traffic growing at 58% and business IP traffic at 21% (source: Morgan Stanley)

YouTube accounts from anything from 2-10% of all Internet traffic

SOLUTIONS

BLADE SERVERS

Blade Server demand

CRISIS DRIVEN

DATA CENTRES

Lack of Power / cost of power

40-60% of OPEX

Utilization rates

Upgradeability of Data Centres

Location (near Power source)

VIDEO

SURGE IN VIDEO

60-70 billion video streams sent 2007

Many New Apps will be video based

LEGISLATION/COMPLIANCE

HIPPACarbon emissions

-

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Singapore

Malaysia

Vietnam

Thailand

Indonesia

FORECAST MARKET SHARE BY SPACE TO 2015Predicted and Optimistic Outcomes

Forecast Growth in Data Centre Space to 2015 (Source: BroadGroup)

• By 2015 combined Australia/NZ Data Centre Capacity

approximately same as that of Singapore

• India will have more than 5 x Capacity of Singapore

• All figures in sq.m

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

SingTel Expan (S) Global Switch (S) Netmyne/Myloca (M)

HPT Vietnam AIMS (M) CSF Advisors (M) Freenet (M) Equinix (S) Kompakar (M) Jaring (M)

TOP TEN PLAYERS IN SOUTH EAST ASIA (BY SPACE)Malaysia – highest number of players in top 10

Top 10 Players in South East Asia (by Space) (Source: BroadGroup)

Singapore

Malaysia

Vietnam

Thailand

Indonesia

FORECAST MARKET SHARE BY SPACE: 2015Singapore and Malaysia lead SE Asian markets

Forecast Market Share in Data Centre Space 2015 (Source: BroadGroup)

55%32%

0

10

20

30

40

50

60

Corporate Finance Telecom Public Sector Other

Singapore

Malaysia

Vietnam

Thailand

Indonesia

Demand Drivers by Market S E Asia (Source: BroadGroup)

WHAT IS DRIVING GROWTH?Enterprises main driver in developed markets

Dedicated Infrastructure

Client Owned

Located at Customer Premises

Dedicated or Shared Infrastructure

Client or MSP Owned

Hosted by MSP

Shared Infrastructure

MSP Owned

Hosted by MSP

Traditional Outsourcing Managed Services

EVOLUTION OF MANAGED SERVICES MODEL

• Important for SMEs and Public SectorShared Services

• Efficiency in Data Centre – Enterprise

• Complexity creates opportunity to manage virtualized environment

Virtualization

• Enterprise adoption SOA and Web 2.0 – opportunity to manage complex environmentSOA and Web Services

• Enables IT to be delivered remotelyConvergence

• Dependent on remote infrastructure and networks as well as need for applications to be properly maintainedSaaS

• Rapid growth – rate of transactions, e-commerce and legislative requirementsData Storage

• Focused drive for efficiency and cost reductionGreen IT

• Managed security, DR and contingencySecurity

MANAGED SERVICES – ENTERPRISE DEMAND DRIVERS

Financial Services

Retail

Media

Public Sector

MANAGED SERVICES – GROWTH SEGMENTS

Financial Services:Slower growth but increasing need for converged telephony/ Network

Media:Key Target for MSPsOn demand service platformsGrowth in network and storage demands Content Distribution Networks

Retail:On demand models of IT consumption

Public Sector:Growing interest in shared services model (security, value, transparency)

Thank You !

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