Savvis Accelerates Asian Data Centre Strategy

Savvis has launched its second data centre in Hong Kong and indicated that it plans to enter the mainland Chinese market within the next 12 months. Numerous other data centre operators and hosting and co-location facilities providers are also turning to Hong Kong with the aim of exploiting the island nation's growing status as a regional data routing hub, developments that are reflected in BMI's bullish forecasts for spending on cloud computing services and solutions, which rely heavily on data centres. However, China will be a more difficult proposition.

The new 18,000 square-foot data centre is located in the Tseung Kwan O Industrial Estate, is a fully certified Tier III facility offering connections to more than 240 telecommunications operators, carriers and service providers in Asia. The facility is being operated under a joint venture agreement with Real Estate Investment Trust Digital Realty, which specialises in the construction, leasing and maintenance of properties that can be used as data centres.

BMI believes Hong Kong is well positioned to serve Asia's growing data storage and remote processing service requirements. Early implementation of a nationwide broadband next generation access network has allowed for ubiquitous, always-on, high quality broadband service availability to consumers and businesses. As the country is a focal point for many of the region's submarine cable systems, available broadband capacity is high (8,495Gbps as of September 2013, according to the Office of the Communications Authority) and continues to outpace growing data traffic volumes. Furthermore, with almost 200 active ISPs, vigorous competition ensures that bandwidth pricing is attractive.

Dwarfed By China, But Hong Kong Offers Fewer Risks
Cloud Computing Spend Forecasts, 2010-2017

Savvis Accelerates Asian Data Centre Strategy

Savvis has launched its second data centre in Hong Kong and indicated that it plans to enter the mainland Chinese market within the next 12 months. Numerous other data centre operators and hosting and co-location facilities providers are also turning to Hong Kong with the aim of exploiting the island nation's growing status as a regional data routing hub, developments that are reflected in BMI's bullish forecasts for spending on cloud computing services and solutions, which rely heavily on data centres. However, China will be a more difficult proposition.

The new 18,000 square-foot data centre is located in the Tseung Kwan O Industrial Estate, is a fully certified Tier III facility offering connections to more than 240 telecommunications operators, carriers and service providers in Asia. The facility is being operated under a joint venture agreement with Real Estate Investment Trust Digital Realty, which specialises in the construction, leasing and maintenance of properties that can be used as data centres.

Dwarfed By China, But Hong Kong Offers Fewer Risks
Cloud Computing Spend Forecasts, 2010-2017

BMI believes Hong Kong is well positioned to serve Asia's growing data storage and remote processing service requirements. Early implementation of a nationwide broadband next generation access network has allowed for ubiquitous, always-on, high quality broadband service availability to consumers and businesses. As the country is a focal point for many of the region's submarine cable systems, available broadband capacity is high (8,495Gbps as of September 2013, according to the Office of the Communications Authority) and continues to outpace growing data traffic volumes. Furthermore, with almost 200 active ISPs, vigorous competition ensures that bandwidth pricing is attractive.

BMI believes that more than 30 high-capacity data centres are already in service in Hong Kong, including facilities operated by Hutchison Global Communications, PCCW, NTT Communications and IBM, among others. Consequently, Savvis will be competing with a number of very large and well-respected local and regional brands. The company will be encouraged by the findings of a recent survey it commissioned that show that Hong Kong will surpass the global percentage average of firms that outsource IT infrastructure by 2015, with nearly 80% of organisations outsourcing to co-location, managed hosting and cloud environments.

Spending on cloud-based services and solutions is forecast by BMI to grow from US$350mn in 2013 to US$1.050bn by 2017. Although consumer-orientated services account for the bulk of cloud spending at present, the balance is slowly shifting in favour of the enterprise sector as more local and global businesses replace legacy intranets and virtual private networks with remotely-managed platforms. Savvis should, therefore, do well even if only captures a small proportion of the overall market.

BMI is less sanguine regarding Savvis' ambitions for the Chinese market. Although as yet relatively underpenetrated by Tier 3 and 4 data centre infrastructure, the market tends to favour local providers and the government imposes strict rules regarding access to and dissemination of a wide range of data and content. Stringent regulations as well as constantly changing degrees of tolerance towards foreign technology companies operating in China pose additional downside risks. However, as Savvis has no vested interest in the content that it would store in its proposed Chinese data centres (Beijing and Shanghai are said to be favoured locations), this would be less of a risk than for companies such as Google or Apple, which are as much content vendors as they are service providers.

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