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Post- COVID Digital Adoption Boosts Data Center Growth

Post- COVID Digital Adoption Boosts Data Center Growth,

Post-COVID Digital Adoption Boosts Data Center Growth

Photo by Christina Morillo from Pexels

The world has hopped onto the internet jet and speeding through murky clouds since the start of 2020. The meeting participants of zoom app has gone up from 10 million to 300 million per day. Netflix has added 16 million new subscribers in Q1 of this year. Large enterprises have turned to 100% work from home model. Doctors have started tele-consultation and teachers are now sharing feedback in live classrooms.

The internet has become the lifesaver after the pandemic. The digital world is now exchanging (or) churning out big data in multifold. But how the cloud infrastructure is managing this sudden demand — able to fuel the new jumbo jets circling in clouds? Do the existing data centers have enough racks to accommodate this unexpected data deluge? Is the data center industry working extra hard behind the curtains?

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I read many recent reports about this giant rack business, and it seems that the industry is laying the groundwork for massive expansions, backed by large capital investments.

New Investments in Data Centers

The global investor community is bullish that more data centers are needed to handle the growing digital economy. Analysts also predict that the post-COIVD new normal will reshape all traditional industries and push them towards a quicker adoption of digital transformation. Despite the ongoing slump, many investors are racing to fund data center expansions. The industry is currently witnessing many discussions around mergers and acquisitions to bolster the expected growth. The global investment firm KKR has recently announced the formation of Global Technical Realty (GTR), which plans to infuse $2.5 billion to develop data centers across Europe. Industry stalwarts such as Equinix, Aligned, Sabey and TierPoint are steadily receiving gaining capital investments to expand their giant racks further. CBRE, one of the largest commercial real estate services and investments firms, has also confirmed that the enquiries for date centers have gone up, globally, in the last few months.

Data Center Vantage Points

FLAP is the new favourite acronym of data center business. FLAP, stands for Frankfurt, London, Amsterdam and Paris, has emerged as the strategic location for global data centers as these cities are globally known for their interconnection advantages. 2019 was a record year for the FLAP HUB with more than 200 megawatts of leasing under its belt. It is now predicted that owing to high demand for digital infrastructure, and with new investments pouring in, the FLAP hub is likely to exceed 200 MW in capacity by the end of 2020. In the North American market, the Hillsboro cluster of Portland has been cited as the hotbed for low-cost data centers with as many as seven subsea telecommunications cables. The Hillsboro cluster is also likely to attract significant investments in the next few years. Concerning the Asia Pacific region, China and Hong Kong lead the market in data center development, followed by India and Australia. APAC is the fastest-growing big data economy in the world. China is the world’s largest IoT market, with 64% of global cellular connections; 70% of startups in India are adopting IoT in their business; many APAC countries are transitioning to high-speed 5G network. Market research reports suggest that there will be a very strong data center growth in this region.

The COVID Roadblocks

The industry experts are viewing the supply chain disruption due to the closing of international borders and severe restrictions imposed on physical tours of data centers as the two major barriers for expansions. For the construction of new data centers, companies depend on their suppliers who are spread throughout the globe. With no definitive positive signs on the free movement of international goods, lack of adequate supplies can slow down the growth. Another concern that echoed across the board is that entry to data centers is allowed only for mission-critical staff. Everyone else is barred to go in to avoid the possible spread of COVID 19. However, to close any new deals customer’s engineers and decision-makers would expect a physical tour of data center facilities. It has been the sales process to entrust a cloud service provider. A virtual tour is an alternative but not the optimal solution.

Amid the few industries that survived the pandemic, the data center is one. The near-term growth in this industry also means new jobs in the employment market, which is currently plagued with the layoff crisis. The data center (giant racks) industry growth could be the new silver lining in many lives and families.

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Post- COVID Digital Adoption Boosts Data Center Growth was originally published in AR/VR Journey: Augmented & Virtual Reality Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.

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Author: Arun Kailasam

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