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, datacentre 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 datacentre 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.
“To cater to the growing demand for datacentre services, specialist providers, including local providers such as NEXTDC, Metronode and Canberra Data Centres, and global providers such as Equinix, Global Switch and Digital Realty, have added datacentre capacity, either by expanding their existing data centre facilities or building new ones. A growing trend for large IT service providers and telcos that own their own datacentres to consolidate their data centre footprint by shutting down older, less efficient datacentres and leasing data centre space within the larger and newer facilities of these datacentre specialists, as it is more cost effective."
The adoption of modular datacentres is still in an early growth phase, however, momentum is beginning to build in the market and stronger adoption will occur as prices fall further. Modular datacentres cater to niche segments of the market where companies or government departments require their own built facilities. They have higher relative cost, and most are deployed in outdoor and often remote locations, in industries such as healthcare, education, construction, mining, defence, manufacturing, oiland gas and renewable energies.
“Another growing trend over the last two years is for commercial property owners to acquire existing datacentres or build new datacentres and then lease them to datacentre specialist providers, IT service providers or individual companies. Examples include Asia Pacific Data Centres (APDC) and Keppel DC Real Estate Investment Trust, both of which have purchased facilities from major local data centre providers,” Harpur said.
Datacentre providers have several challenges, according to Frost & Sullivan. Significant new datacentre capacity has entered the market over the last few years causing lower than average occupancy rates, and placing downward pressure on datacentre pricing.
However, additional capacity is generally being absorbed quickly. Securing sites in CBD locations and gaining access to sufficient power is increasingly challenging and it is becoming increasingly difficult for datacentre owners to plan for additional capacity.