The data centre industry forms part of the global economy and, as such; it is subject to the same macro-economic trends as every other industry. For 2013, those continue to be dominated by uncertainty and fear. The gorilla of course, is the on-going problem in the Eurozone.
This time last year, many commentators predicted that this would come to a head in 2012, with either the central monetary authorities accepting fiscal union and central control across the Eurozone, or the Eurozone starting to break up. In the event, neither happened and the situation remains unresolved and will continue to drive uncertainty in 2013.
One major uncertainty has been resolved with a convincing win for Barack Obama in the US presidential elections and the removal of the possibility of a lurch to the right. However, the “fiscal cliff” remains and will cause a massive contraction in the US economy, and hence the world economy, if it goes ahead at the end of 2012. For the UK, predictions are that interest rates will stay low for the next two to three years as the banks continue to rebuild their strengths at the expense of everyone else.
So the macro-economic environment within which the data centre industry operates is likely to stay uncertain and fearful in 2013. Companies have massive cash reserves, but they choose to continue to build them rather than invest. Decision making cycles in 2013 are likely to be as they are now – slow. Companies will not invest in new project unless they have the confidence that their customers will buy, and their customers think the same and so the cycle goes round.
At a more specific industry level, the on-going trend towards commoditisation of infrastructure is likely to continue. Whereas data centres five years ago were specific and unique, new entrants to the market have made data centre capacity more available than it was and driven up technical standards. Older facilities have upgraded to match new builds, which ultimately benefits the industry and its customers.
The new builds and rebuilds are of varying quality and veracity, with some being excellent, however, others are claiming tier levels and other standards which are simply not true or claiming to be in central London whilst actually being somewhere else – perhaps following the example of London Southend Airport? Even in a more commoditised market, quality, connectivity, accessibility and service still stand out and well-run established data centres will always be first choice for informed customers.
The next part of the consolidation process is probably networks; new entrants are coming into a market where prices continue to fall at a dizzying rate. There is no end of small new entrants to the marketplace, some of which will succeed and some of which will fall by the wayside.
At the larger end, consolidation continues. In City Lifeline’s central London data centre alone, Abovenet has become Zayo (and consequently moved from the very top of everyone’s list to the very bottom, possibly not causing joy in Abovenet’s marketing department), Cable and Wireless/Thus has become part of Vodafone, PacketExchange has become part of GT-T and Global Crossing has become part of Level 3.
Data Centre Infrastucture Management (DCIM) systems may establish themselves more in 2013. DCIM was predicted to have a massive impact, with Gartner stating publicly in 2010 that penetration would be 60% by 2014. In the event, penetration at the end of 2012 is only 1%.
DCIM is hard and laborious to implement but it offers serious benefits to larger organisations in terms of the management of their physical assets, power, space and cooling and can quickly repay its investment in answering the basic question “how many servers can I have for the capacity I am paying for”. DCIM deserves more success than it has had to date, and perhaps 2013 will be the year it takes off.
Power densities will continue to increase in 2013. Five years ago, many racks drew 2KW (8 amps). Now 8 amp racks are becoming unusual and 16 amps racks are the norm. Five years ago 7KW racks (about 30 amps) were unusual, now they are common, and 20KW racks are starting to appear. The trend to higher and higher performance and power densities will continue.
The data centre industry continues to grow, driven by the move to Cloud. By the end of 2013, an estimated 23% of all data centre space will be in commercial colocation operations. The leading market segments are likely to be Telecoms and Media, with 24%, Healthcare and Education, with 21% and Public Sector, also with 21%. In-house data centre capacity is likely to continue to decrease and the commercial colocation market to grow, even in spite of the uncertain macro-economic environment.