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01 September 2017
| Natalie Bannerman
A number of industry market trend reports have recently been published so Natalie Bannerman takes a look at the evolving worlds of interconnection bandwidth, SDN, NFV and colocation
Interconnection bandwidth to hit
5,000Tbps by 2020
Interconnection bandwidth is expected to grow at a 45% CAGR
to reach 5,000Tbps by 2020, dwarfing global IP traffic in both
growth (24%) and volume (855Tbps), according to
Equinix’s inaugural Global Interconnection
Findings from the Global Interconnection Index, which has
analysed the adoption profile of thousands of carrier-neutral
colocation data centre providers and ecosystem participants
globally, show that the capacity for private data exchange
between businesses is forecasted to outpace the public internet
by nearly two-times in growth and six-times in volume by 2020.
It is also growing faster than Multiprotocol Label Switching
(MPLS), the legacy model of business connectivity, by a factor
of 10 (45% to 4%).
"Interconnection bandwidth is expected to grow at a rapid
pace over the next four years with growth across all regions
predicted to grow 40% per annum or greater," stated the
SDN and NFV market 'to be worth $54 billion’ by
Analysts say network transformation is catching on and
MarketsandMarkets, an analyst company, says the global markets
for software-defined networking (SDN) and network functions
virtualisation (NFV) are set to experience considerable growth
in the next few years, bringing its market value to around $54
The current value of the SDN and NFV markets are around $3.6
billion, meaning the predicted growth will be at a compound
annual rate of 71.4%.
SDN is set to transform the network into a more open and
programmable framework and NFV to optimise network resources,
ultimately creating the ability to deliver flexibility in
bandwidth. Both of which are gaining prominence due to the
growing technological advancements in networking and data
The end result is a reduction in network congestions,
improvement in network user capacity and a reduction of costs
associated with hardware needed for network expansions, says
Telecommunications services providers are set to be the
fastest growing end-user segment during the forecast period,
says the company.
Asia-Pacific is expected to have the highest compound annual
growth rate across the globe, due to the increasing number of
data centre deployments occurring in the region. It is set to
displace Europe into second place in terms of revenue
Japan will be the biggest customer in the region in terms of
revenues, but China and Korea are doing the most research in
North America is driving continued advancements in
technologies and business applications, leading the way for
adoption and driving the growth of SDN and NFV in the
The report also recognises governance and security
standards, coupled with the lack of knowledge among end-users
and enterprise, as well as the difficulty in balancing SDN with
traditional technology as the main obstacles for the growth of
the software-defined networking market.
Included in the report is a competitive landscape analysis,
which is based on product offerings and business strategies. It
includes some of the biggest SDN and NFV vendors such as:
Nokia, Cisco Systems, Ericsson, Huawei, Intel, IBM, Hewlett
Packard, Juniper, NEC, Pica8, Brocade, Ciena, Pluribus Networks
and Big Switch Networks.
Equinix and Digital Realty lead the colocation
Equinix and Digital Realty dominate the colocation market
with the progression of their respective acquisitions and
mergers. Equinix has recently finished the acquisition of 29
data centres from Verizon, while Digital Realty plans on
merging with DuPont Fabros, with the newly merged Digital
Realty/DuPont Fabros set to maintain a narrow lead over
Equinix/Verizon in the US.
According to findings in a report by Synergy Research Group
in June 2017, Equinix and Digital Realty are both market
leaders in the colocation market, accounting for 11% and 7% of
worldwide Q1 revenues respectively.
The reports indicate that had the M&A deals happened at
the beginning of the year, their Q1 market share would be in
the region of 13% for Equinix and 9% for Digital Realty. Just
behind these companies are NTT, with a 6% market share,
KDDI/Telehouse, with 3%, and a 2% share belonging to: China
Telecom, CenturyLink (now Cyxtera), CyrusOne, Global Switch and
Across the market segments of retail colocation and
wholesale, Equinix/Verizon would have had a 17% share of retail
colocation, while Digital Realty/DuPont Fabros would have had a
31% share of the smaller wholesale segment.
Regionally the Q1 data shows that the market continues to
expand steadily with APAC having the highest growth rate, the
highest in the area being: China, Hong Kong, Japan and
Australia. Equinix is the major leader in EMEA, ranked second
in North America and third in APAC. Digital Realty is the
leader in North America and NTT leads in APAC.
"The aggressive growth of hyper scale data centre operators
and other cloud and hosting companies is helping to drive
demand for data centre footprint across all regions, while many
enterprise customers require their data centre operators to
span multiple metros and countries. These fundamental market
drivers mean that colocation is increasingly a market where
scale and geographic scope determines success," said John
Dinsdale, a chief analyst and research director at Synergy
Similarly, the results of Cloudscene’s data
centre leaderboard (see page59) finds Equinix dominating across
all regions, holding the number one spot in North America,
EMEA, Oceania and Asia for the second quarter of 2017.
Interestingly, the overall scores for second in line, across
the board, saw Digital Realty, Interxion, NextDC and SUNeVision
also continue to grow and they were held by the same four data
centre operators in Q1.
Cloudscene’s founder, Bevan Slattery, said:
"Whilst we expect the movement to be minimal in the top half of
the leaderboard each quarter, what will be interesting to
follow is the change in the second half rankings where you can
see competition is rife. The scores are extremely tight and you
can really get a feel for how fierce the market must be between
the medium-sized players."
The Q2 data also introduced six new entrants to the board -
Cyxtera (6th in North America), Netrality Properties (9th in
North America), itconic (7th in EMEA), ST Telemedia Global Data
Centres (8th in Asia), Macquarie Telecom (9th in Oceania), and
YourDC (10th in Oceania) - which supports just how fierce the
colocation market has become.