Market trends: in brief
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 Index.
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 report.
SDN and NFV market ‘to be worth $54 billion’ by 2022
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 billion.
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 centre consolidation.
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 the report.
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 generation.
Japan will be the biggest customer in the region in terms of revenues, but China and Korea are doing the most research in this area.
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 region.
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 market
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 Interxion.
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 Research Group.
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.
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