ANALYSIS UPDATE OF THE DATA CENTRE MARKET – APRIL 2003
Before the telco crisis I described the data centre market as one of the rising stars of our industry but, of course, in the meantime we have seen a major shake-out in this market segment.
As this the data centre market was one of the youngest in our industry, there were not many mature organisations involved at the time of the crash. The first companies arrived in the mid-1990s, and many of them, stimulated by the telco boom of the late 1990s, invested large sums of money. With the telco collapse of 2000 the projected growth did not happen and many of the new players soon started to run out of money. This is a real pity, as many of these companies didn’t ever have a chance to properly test the concept.
This collapse has nothing to do with the principle of data centres. This concept is as strong, if not stronger, now as it was in the 1990s. The only problem is that the projected growth will be delayed by 3-5 years or so. Those who entered the market late and those who profited from the consolidation , as well as telcos are going to be successful operators in this market.
It increasingly looks like that these telco operators are going to be the short-term major winners. For them it is an extension of facilities and services they already have and offer. Dedicated players don’t have that level of synergy and have great difficulties filling up space. It will be the telcos who will lead the data centre market out of the crisis; it won’t be until the end of the decade that there will be more room in this market for dedicated operators.
Broadband has now well and truly left the starting blocks and by late 2003 it will have reached critical mass (10% penetration), at which stage corporates, content providers and others will begin to look at how to use broadband to their strategic advantage to deliver products and services to their customers. This is when the data centres will come into their own. They will become the engine rooms for these developments.
Hosting companies such as have a value added managed applications service providers approach (MASP) and are able to sell their services (websites, e-commerce, content hosting) within this emerging broadband environment. They can utilise the data centers at rock bottom prices, leaving the data centers on commodity based operating levels. This has always been one of my major criticism of data centres; they deliberately choose to operate on ‘real estate’ levels only, the market however request a one-stop-shopping service on a value add level. Telcos and hosting companies are much better positioned to establish themselves in these markets.
Eventually data centres will start to mushroom around the country. Close to population centres there will be small and large centres, broad, one-size-fits-all centres and highly specialised ones.
So, to those involved – don’t despair, there is light at the end of the tunnel. And if data centres fit into your strategy, now is the time to start setting one up, so as to be ready by 2005 – 2008.
See also:
Global – Public Data – FM, Outsourcing, Data centres
Global – Industry – Managed Service Application Provision (MASP-ASP)
Global – Industry – Customer Management, CRM, OSS, Billing
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Tagged in: Australia, New Zealand & South Pacific, Global
