An increasingly competitive market that requires localized service portfolios and robust end-to-end service capabilities offerings
SINGAPORE, March 7, 2017 /PRNewswire/ -- The key theme driving growth in the Asia-Pacific data center services market across is the explosive digital needs of economies with large populations as China, India, and Indonesia.
Furthermore rising complexities within the IT infrastructure brought about by virtualization and consolidation, coupled with various cost constraints, are encouraging enterprises to look into adopting third-party data center services. This is spurring the strong growth of managed hosting in the region.
Nevertheless in 2016, colocation services continue to account for the bulk of data center services revenue in Asia-Pacific at 62.8% of the market, with the remainder contributed by managed hosting services. Frost & Sullivan estimates the Asia-Pacific data center services market to be worth US$14.13 billion in revenue in 2016, representing a growth of 15.3% over 2015. The market is expected to grow at a compound annual growth rate (CAGR) of 14.7% from 2015 to 2022 to reach US$31.95 billion at the end of 2022.
Colocation services continue to dominate data center services revenue today, as they are largely driven by large enterprises and highly regulated verticals, such as Banking, Financial Services, and Insurance (BFSI). In addition, cloud service providers are also generating new demand for colocation as they opt for third-party facilities to host their infrastructure for providing services to customers.
Increasingly, some enterprises have chosen to bypass management of their IT operations and migrate their services straight to cloud deployments such as Infrastructure-as-a-Service (IaaS). In response to this, many service providers have expanded data center service offerings to include cloud-based offerings as well.
The Asia-Pacific data center services landscape is highly competitive, and dominated by telecommunications companies/carriers, wholesale/retail data center service providers, as well as managed service players.
Frost & Sullivan has evaluated the top 12 service providers in the Asia-Pacific region and assessed them using the Frost Industry Quotient (Frost IQ) matrix. The 2017 Frost IQ -- Asia-Pacific Data Center Service Providers matrix provides a snapshot for industry CIOs and other decision makers, on the selection of best-in-class data center service providers in the region.
The Frost IQ is a proprietary Frost & Sullivan vendor assessment tool that accurately operationalizes and captures the merits and challenges faced by technology vendors in their respective segments and geographies. The tool aims to provide key decision makers with a localized yet objective perspective of the industry in a highly heterogeneous business environment. The matrix comprises four quadrants: Champions, Challengers, Defenders, and Explorers.
In the Frost IQ for Asia-Pacific Date Center Services Providers, 2017, NTT Communications, China Telecom, Fujitsu and Equinix have been positioned in the Champions quadrant, based on a combination of market share performance and future growth strategies as determined by Frost & Sullivan research. In total, the top four vendors accounted for approximately 28.4% of the data center services revenue generated in the region.
In the Challengers quadrant, Frost & Sullivan has identified Singtel, KDDI Telehouse, Telstra, Global Switch, Digital Realty, STT Global Data Centres CenturyLink and Keppel Data Centres. These service providers have demonstrated strong market potential in terms of future growth strategies with regard to go-to-market strategies and breadth of portfolio offerings, among others.
"Their high focus on growth backed by an effective go-to-market strategy puts the identified 'Challengers' in a good position to compete with the relatively established players in the market. The players are working towards creating differentiation by focusing on solutions for easier infrastructure management in hybrid IT models," noted Nishchal Khorana, Director, Digital Transformation, Asia-Pacific, Frost & Sullivan.
Keppel Data Centres is a relative newcomer in the industry and is placed in the Explorers' quadrant. Frost & Sullivan expects the vendor to grow strongly in the near future, given its aggressive growth strategy and expansion plans in recent years.
Ajay Sunder, Vice President, Digital Transformation at Frost & Sullivan Asia-Pacific believes that the data center services market in the region is becoming increasingly competitive owing to significant data center build-outs in countries such as Japan, Australia, and Singapore. This is compounded by the fact that increasing data sovereignty concerns in countries such as Indonesia and China are favoring dominating vendors in the respective countries.
Nevertheless despite intense competition, market participants can realign their strategies to capture market share.
"Having a comprehensive end-to-end portfolio of data center and cloud services, maturity of sales channel partner ecosystems and localized go-to-market strategies are key considerations for the selection of data center service providers," noted Sunder.
The Frost IQ (FIQ) for Asia-Pacific Data Center Service Providers, 2017 covers colocation and managed hosting services in the Asia-Pacific region. The parameters used to determine relative positioning on the FIQ matrix include market share, product/service strategy, people/skills strategy, ecosystem strategy, and regional business strategy.
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