Savvis Expansion Meets Market Needs

Building On Data Centre Future
CenturyLink Income By Segment (US$mn)

Cloud services provider Savvis will expand its data centre footprint by almost 8,000m 2 across its global operations including new data centres and extensions to existing locations. Savvis' expansion uses co-location and wholesale data centre space in order to offer greater capacity for cloud computing to customers. The majority of its data centre locations are in the US but the expansion also targeted London, Singapore and Hong Kong. BMI sees great potential for cloud computing services across developed and emerging markets, with the US leading the way.

Savvis' announcement follows a number of similar expansion announcements from major rivals in the cloud space including Amazon Web Services , Rackspace , Google and IBM . This increase in activity reflects growing confidence in and understanding of the cloud computing market and greater potential for managed services providers. Savvis' vice president of colocation product management said the expansion helped build its recovery services products, which has been one of the fastest growing services for the company.

The new data centres connect to Savvis' three cloud data centres, two in the US and one in Singapore. With fierce competition from rival providers, Savvis' investment into its infrastructure makes sense. The company, owned by telecoms operator CenturyLink , has seen revenues grow from data hosting services. However, costs have grown at a slightly faster rate, reducing the income CenturyLink reports from its data hosting division. Nevertheless, with revenues slowing at its larger telecoms-based divisions, the focus on expanded data services is a smart strategic move. Acquisitions in the sector have further boosted its position.

BMI believes colocation and hosting services will increasingly be included in telecoms operator strategies, providing an alternative revenue source while traditional voice revenues start to decline and required spending on broadband infrastructure remains high. Investing in expansions across the US reflects the strong interest from customers there. Its international expansion has concentrated on major financial hubs, providing a wealth of potential clients. However, BMI notes that cloud computing potential growth will be particularly high in emerging markets, where many of Savvis' rivals have focused their expansion plans. We believe that further international expansion will likely include reaching into emerging markets, not only for new companies based in these markets, but also for US companies looking to capitalise on the potential for growth in many industries in emerging economies.

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