Which way now for data centres?

CenturyLink and Verizon are thinking of getting out of data centres, but NTT continues to expand. The Equinix Telecity merger has been given a conditional green light. Microsoft is responding to the challenge posed by the demise of the Safeharbor agreement following the Facebook v Schrem ruling by announcing they will be setting up data centres in Germany and UK. Rackspace has announced it will be bringing Fanatical Support to AWS. The major network-centric data centre operators continue to cluster around key interchange points and metro areas, but growth of streaming services, Big Data and IoT all point to a move of some applications and data to the edge.

These are just a few of the headlines from the past few months that point to some significant shifts in the data centre market. At IPExpo last month there were panel sessions on the Future of Co-Location and the Future of The Data Centre. At DCD Converged this week there is a session entitled “It’s a data centre Jim; but not as we know it.” – How will the data centre industry respond to the needs of the IoT?

Clearly data centres are living in interesting times. But this needn’t be a curse, quite the opposite. We see that there are fantastic opportunities as long as data centre operators are clear about their business models. The messages coming out of Verizon and CenturyLink point to the significant capital investments that need to be made in delivering modern data centres, which is particularly hard on carriers already looking at significant capital expenditure upgrading their networks. You need investors who understand the long term nature of the capital commitment.

The increasing demands for data sovereignty and the problems caused by the Facebook case make local data centres more attractive. Pair that with improved networks and potential problems getting to data centres in congested urban locations, the future for smaller regional and local data centres looks better than it has done for some time.

Much of the current data centre growth has been focused on new apps and new technologies. The need to deal with ageing legacy infrastructure and applications will see Enterprise CIOs having to make decisions on data centres around buy vs build and how they incorporate new apps and services into some sort of hybrid-cloud architecture. Some data centre operators have bought IT consultancies that can help CIOs navigate these difficult decisions. Others have developed working relationships with systems integrators and Managed Service Providers. Others again have moved into the managed services space themselves.

So, there are growth opportunities out there and decisions for data centre operators about which ones to chase. No one wants to be the commoditised server barn. So, to take profitable advantage of this growth data centre operators will have to think carefully about which market segments to go after with which value propositions and how they use channels and eco-systems to maximise reach and minimise channel conflict.

This post first appeared on the old Cassini Reviews website.