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Outsourced data centre market grows on the back of the Cloud

Mike Gee | Sept. 3, 2015
Data centre services revenue in Australia totalled AU$826 million -- a growth of 18.3 per cent over 2013.

data centre

As a result of increased adoption of Cloud computing, driven by the consumer segments increased consumption of videos, social networks, mobile data and gaming, and the corporate sectors' use of data intensive applications, the Australian outsourced datacentre market continues to grow strongly.

Analyst, Frost & Sullivan, said, in 2014, data centre services revenue in Australia totalled $826 million - a growth of 18.3 per cent over 2013. Co-location service accounted for approximately 69 per cent of the total data centre services market.

According to Frost & Sullivan’s new report, Australian Data Centre Services Market 2015, Australia’s high growth phase of outsourced datacentre adoption will peak in 2015 and ease off in 2016 and 2017 as the rate of new datacentre capacity entering the market slows down.

Datacentre services revenue for 2015 is predicted to grow by 18.2 per cent, but whilst managed hosting continues to see strong revenue growth, co-location revenue growth is beginning to ease as an increasing proportion of data centre clients migrate their co-location and managed hosting services to Cloud services.

Frost & Sullivan senior research manager, Australia & New Zealand ICT Practice,Phil Harpur, said that wholesale data centre providers and those that focus on co-location services only, face significant pressure because of this trend. However, the growth of Cloud services has been a key factor in developing new business opportunities for datacentre specialist providers.

Frost & Sullivan predicts the Australian datacentre services market will grow at a CAGR of 13.7 per cent from 2015 to 2020. Managed hosting will experience stronger growth than co-location over this period, as demand decreases due to companies migrating from co-location to Cloud services.

Cloud providers, especially larger global providers such as AWS, Microsoft and IBM SoftLayer are driving strong growth in the market and rapidly expanding their Cloud capacity, whilst the government sector continues to increase its use of third-party hosted datacentres.

Demand is also growing for disaster recovery and business continuity services. Connected, multi-tenanted datacentres are best placed to provide these services. Most third-party datacentre providers in Australia have multiple datacentres in multiple locations.

The average power density requirement of datacentres is now up to 40KW to 50KW per rack and continues to increase in line with the increasing demand for high-performance computing applications, according to the analyst. As rack densities decrease, physical datacentre space needed declines. This trend impacts datacentre providers offering co-location services on both a retail and wholesale level.

Harpur said, “As the Australian datacentre services market expands,diversifies and matures, there are growing opportunities for niche providers specialising in specific verticals to enter the market. For example, Canberra Data Centres and Australian Data Centres focus on the government sector in Canberra. The Australian Liquidity Centre (ALC), which is owned by the Australian Stock Exchange, services organisations in the financial services segment.


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