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A New Era Accelerated: Evaluating the Data Center and Network Infrastructure Landscape Now and Beyond 2020

1 October 2020

With demand for services sky-high and some major industry shifts taking place during 2020, leaders across the data center and network infrastructure sector are evaluating the impact of the ongoing pandemic, and predicting the global expansion, innovation, and transformation to come. 

We gained a deeper understanding into the impact of the global health crisis on our industry, and greater insight into what the future of ecosystems might look like, from PTC’s recent ‘Frictionless Business’ webinar, ‘Impact of COVID-19 on Data Centers and Network Infrastructure’ which brought together executives in this space from all corners of the globe to discuss relevant issues. Here’s what we learned:

The world’s businesses are bandwidth-hungry

Working and learning from home, and having to adapt to new circumstances, has meant there has been a huge shift in the demand curve for bandwidth-intensive network services and applications with carriers reaching new heights of around 15.5Tbps in data consumption.

Digital Realty’s CEO Bill Stein points out that this level of bandwidth is largely demanded as a means to operate communication infrastructure programs like Zoom and Microsoft Teams.

However, we’ve also seen significant increases, week on week, from particular carriers, for content types such as Gaming (75%), VPN (34%), and Web Traffic (20%), during this time. 

On top of this, Colt Technology Services’ CEO, Keri Gilder, has observed a 100% uplift in demand for VoIP services, as well as a mass transition to cloud environments, which she says is supported by a 17-times increase in the willingness of enterprises to migrate from on-premise workload environments to the cloud.

Of course, we can’t forget to mention 5G here with fixed loans and mobile broadband becoming increasingly more important to businesses as a result of distributed working, this year. Cloudscene Founder, Bevan Slattery anticipates the widespread popularization of 5G as we move forward.

At the heart of many of these rapidly-expanding technologies, is the data center, with service demand accelerating in parallel with other technologies and applications. Digital Realty has experienced a 92% increase in bookings in Q2 compared to the previous quarter, according to Bill Stein, who says this shows that, “…data centers represent the central nervous system of the digital economy.”

We’ve achieved five years of digital transformation in a single year

Digitalization is exploding. Many share the view that there was no doubt digital transformation would have taken place to the extent it has anyway – but, over a longer period of time. However, with consumer demand for network, cloud, and data center services rising exponentially, this year, it’s said that we’ve achieved around five years of digital transformation in a single year.

In Southeast Asia alone, there’s been an increase of around 60 million digital consumers from 2018 to 2020, with 96% of those people accessing the internet on their smartphones, in addition to there being a total value of approximately $85 billion in digital payments in this region for 2020.

As Dan Caruso, CEO of Zayo, puts it, “The world as we know it will never be the same. It’s the ending of one era and the beginning of another.” He now believes that for the next 5-10 years, those businesses that are already tech-forward will accelerate; their path is more clear. Those that aren’t will get even further left behind.

Supporting this notion, Bevan Slattery gives his insight into the idea that digital transformation business cases have been brought forward with dislocation in the office space, working from home, and the demand for 5G; he says, “We’re now going to be operating from the demand that you would normally see in 2023.”

Three billion people are yet to connect to the internet

Even with all this said, three billion people worldwide – with two-thirds located in Asia – are yet to connect to the internet. These unconnected audiences are considered the ‘next three billion’; presenting a considerable opportunity for data center and network infrastructure providers to move into emerging markets. 

And, global OTTs are, in fact, taking up this opportunity with findings from the webinar revealing that big players are heading towards these underserved markets, despite being traditionally concentrated in the US and Europe.

This is particularly crucial as the United Nations estimates that nearly 90% of the working-age population will live in an emerging market by 2024.

On using progressive technologies, like solar, batteries, and wireless tech, to expand into emerging markets, Bevan Slattery says, “If we looked out in five years, I think this will be the most transformative part of this industry.” He believes that billions of people in remote communities gaining access to services and worldwide connectivity will be incredibly important for the industry – and the global economy – moving forward.

Although expanding into emerging markets presents a great opportunity for growth across data center and network service providers such as Digital Realty, who now uphold a market share in Latin America, India, Africa, and Eastern Europe, this venture also comes with challenges.

“While the growth rates are huge in these markets, the initial dollar investments are small,” Bill Stein said in the webinar. “It’s hard because the legal environment might be different than what you’re used to, there might not be the same level of political stability, and there may not be the same level of predictability in terms of how the currency will move.”

Keri Gilder raised the idea that industry partnerships could be the ultimate gateway into these emerging markets. By connecting with industry peers who are already based in these locations and may have a greater feel for the markets’ geopolitical climate, such as Liquid Telecom in South Africa or MainOne in Nigeria, global industry expansion will surely surge as a whole new population of users gain critical services.

AI is the next big race to be run

With the cloud race likely already run – and AWS, Microsoft Azure, and Google Cloud becoming early leaders in the now US $111 billion cloud infrastructure market – the industry’s focus now turns to what’s next.

Keri Gilder and Bevan Slattery see Artificial Intelligence and Machine Learning as hugely influential across the next generation of data and network services. Bevan Slattery says that for those who take the lead early in big data and AI, “There’s a great opportunity like there was in cloud back in 2010.”

Dan Caruso anticipates that the popularization of autonomous vehicles will also follow, saying, “Now what we’re recognizing is that autonomous vehicles are part of the logistics process, the supply chain, of moving goods from central places to where people and businesses are without necessarily having drivers to drive them around.”

The entire ecosystem is changing

With so many changes likely to take place within the industry – now and beyond 2020 – there is no doubt that the ecosystem will begin to completely transform for businesses worldwide.

Firstly, the transition that providers are seeing from on-premise environments to the cloud is enormous, and according to Bevan Slattery, will shape the way ecosystems operate in the very near future. He says, “If you don’t take the enterprise into the cloud, the cloud is coming out to the enterprise.”

He adds, “What we saw with hyperscalers, we’ll see with the network,” – by which he means that the network edge will continue to grow and get further out, beating the movement of the computing edge.

Dan Caruso predicts that edge data center deployment will also increase in the coming years as cloud companies seek to connect more directly with their customers, 5G is deployed using C-RAN nodes that are used to connect with small cell sites, and data-consuming autonomous vehicles become popularized.

Bill Stein emphasizes the importance of subsea landing stations, explaining that while data is going to the edge, it’s also moving around the world, and service providers will look at where subsea cables come in to build out ecosystems of services.

And finally, Keri Gilder anticipates more fiber building to take place in European cities and municipalities as the continent’s providers seek to catch up with those of the US, which will mean greater connectivity in these areas.

There’s no doubt that accelerated industry growth has been brought about by the global pandemic – and its effects on data center and network demands have brought forward a new era of technological evolution and innovation. Now more aware of the impact, we’re looking at a future beyond 2020 that will be, as predicted by industry leaders, even more transformative.

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