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0:00 - Intro & PTC Recap

3:24 - Hyperscale Demand in North America

10:27 - Growth in Secondary European Markets

15:20 - Planned Power Growth in Sydney

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We produced our 4Q 2021 podcast, going over the data center trends in North American, European, & APAC markets, on LinkedIn Live. This is the recorded version of the podcast. Comment below if you have any additional questions you would like us to address.

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NVIDIA’s Director of Solutions Architecture, Director of Engineering, share their insight on the growth of AI and its impact on edge computing.

In this interview with NVIDIA, Rama Darbha, Director of Solutions Architecture, and Roopa Prabhu, Director of Engineering, share their insights on the industries driving edge computing, the impact of AI on the data center industry, and future AI innovations affect on the footprint of the data center industry.

Edge computing, AI, & data centers

Edge computing and storing capabilities are utilized by several industries in different capacities and artificial intelligence (AI) is a major driver of this need. Manufacturers use edge computing to deploy real-time decision making AI in autonomous cars. Retail providers use edge computing in robotics with many applications from warehouse management to theft prevention. Providers utilize edge storing capabilities to host geographically decentralized regions, to name a few examples of edge users.

Highlights from NVIDIA’s GTC conference

Rama and Roopa discuss the many AI innovations emerging that were addressed during NVIDIA’s annual GTC conference. AI and other similar data heavy technologies are increasing demand in the data center industry calling for the infrastructure to respond quickly to this evolution. With technological improvements, data centers are poised to accommodate more data and take on new opportunities in edge computing and AI.

NVIDIA aims to partner with companies to provide various solutions through AI enabled systems.

Interested in Hyperscale data centers? Sign up for our free hyperscale data center course:

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As CEO, Mike Sicoli led INAP through financial restructuring in the middle of the Covid pandemic, all while continuing to focus on the importance of offering a wide array of services in this increasingly hybrid world.

Being able to offer a suite of different connectivity and hosting options is important in today’s market and Mike believes we’re still on the front end of businesses transitioning to hybrid. So many companies still have most of their operations on premises, from an enterprise standpoint. For them, the potential of public and private Cloud is just starting to open.

For various reasons, particularly cost and the speed that a private Cloud edge networking setup can offer, a large chunk of data and operations will never see the public Cloud. Hybrid is here to stay. So, the trick is helping clients navigate this complex set of options, and making it work well without jumping through too many hoops.

Clients can feel more secure about their future when they deal with a company that has a lot of diversified services and assets. No matter where their journey takes them, a company like INAP will be able to help them out. No Cloud hosting decision is binary, or fixed, or irrecoverable. Flexibility in infrastructure design is more critical than ever.

Mike believes that the hardest job in the corporate world falls on the shoulders of the CIO, or the person in charge of the IT infrastructure. Some of the decisions they make can take months or years to play out. So, when they need to be more agile and flexible, moving their spend around, it’s important to work with them rather than stubbornly forcing them to stick to an architecture that might no longer be valid.

So, the two programs that they offer are service portability and a performance guarantee. It means that if the customer doesn’t feel like INAP is performing up to their standards, they can leave without penalty. Some of the big, specialist infrastructure providers play a ‘gotcha’ game with clients, locking then into a three-year, five-year, or even longer contract with no flexibility. To keep a client happy in the long term, it’s much better to offer flexible terms, rather than muscle them with business or legal threats. That leads to more business referrals and better word of mouth.

Mike admits that the geographic portability clause can be a little nerve wracking, particularly when cost structure varies from territory to territory. But it’s important to make that work to keep clients happy. He wants them to be excited when they talk about INAP, seeing them as part of the solution and not part of the problem.

Mike’s Take on Industry Challenges and Exciting Trends

One of the biggest challenges right now is making the hybrid experience as easy to consume as possible. There needs to be more automation, more options for self-service. Clients want services that work seamlessly across all platforms, no matter where they’re being hosted. INAP’s entire near future roadmap is centered around enhancing automation and self-service, that’s how important ease of use has become.

Edge networking is the other big challenge. 5G and IoT might be drivers towards this trend, but there will be so many applications for it soon. And though public Cloud will play a role, security and performance factors will necessitate that a lot of that activity takes place on private Cloud infrastructure.

Interested in Hyperscale data centers? Sign up for our free hyperscale data center course:

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Or get a quick 15 minute demo of our platform:

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0:00 - Intro

0:56 - 2021

2:15 - 2021 Demand

5:09 - 2021 M&A Activity

8:12 - 2021 Future Supply

11:10 - 2022 Market Size

13:12 - 2022 Absorption

15:00 - 2022 Vacancy

16:23 - 2022 Pricing

22:04 - Q&A

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Join us as we look back at the main trends in the data center industry that took place in 2021. We'll also look ahead to 2022 and let you know our thoughts on what the data center industry will look like as we get ready to jump into the new year.

We recently got the chance to sit down once again with Peter Jones, Chief Development Officer and founder at Yondr, and get his thoughts on the European data center industry.

A Little Bit About Yondr and Pete

For those unfamiliar, Yondr is a privately owned network provisioning company that offers modular data center designs: MicroBloc, MetroBloc, and HyperBloc. On one end of the spectrum is hyperscale, in the 10s to 100s of megawatts range. On the other end of the spectrum, tailored small scale deployments that help people enter new markets. Sometimes the small scale deployments are in places that have no colocation presence whatsoever. Yondr’s presence spans over three continents, employing over 300 people and still hiring as quickly as possible.

Peter started off as an electrical engineer on the design side, before transitioning into delivery management for Digital Realty during their big EU expansion from 2009 to 2011. From 2011 to 2018 he was part of Google’s global infrastructure team, taking a year off in the middle to skipper a sailing yacht from the UK to New Zealand.

In 4Q of 2018, he started Yondr with Dave Newitt and Miles Redding. They predicted an unprecedented level of network growth by the turn of the decade… but had no idea how much the pandemic would accelerate that need at a global level. 2021 has been a transformational year, with Yondr’s headcount constantly on the rise, and client demands ramping up in both frequency and scope.

The EU Data Center Services Scene

We asked about some of the real time trends in the EU, having seen the vacancy rates in Europe’s major data centers drop from 11.4% down to 7.5% over the last eight quarters.

Peter noted that the drawdown in capacity was fated even before news of the pandemic started to spread. Additional capacity slowed down during the pandemic of course, and now there are either active or planned moratoriums on new builds in some of the five major markets. So, it’s not surprising that those numbers are coming down.

In the broader market, there’s been an influx of new money, and thus new startups. But with no real pedigree amongst the new companies and a limited number of good locations to invest the available money, caution is at an all time high. Everyone knows that the need for bandwidth is there, but the trend in the late 2010s of failing projects and under deliveries is a specter that hangs over the industry.

This is a temporary phenomenon in the EU. Eventually, the market will churn out winners and losers in the new industry startups, and those who execute successfully will be trusted with bigger investments and larger scale projects.

There’s an amazing level of persistence right now; an obsession that causes companies to stick with the big five regions and absorb every possible watt of power and cubic centimeter of space rather than expand into nearby suburbs. The level of tolerance for long lead times and high prices in these areas is at an absurd high. Sure, there are massive day one costs to break ground in a new place. But with prices skyrocketing in these major networking metros, something has to give eventually.

Clients in the EU are looking for big tranches (of both power and bandwidth) right now, either to consolidate their fragmented network hosting portfolio or to avoid fragmentation in the future. This is where some clients are tempted to push outward, away from the overpopulated metro areas… as long as they’re presented with a growth story they can really believe in.

Interested in Hyperscale data centers? Sign up for our free hyperscale data center course:

https://lp.datacenterhawk.com/hyperscale-business-development-fundamentals

Or get a quick 15 minute demo of our platform:

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The top four hyperscale data center users have expanded their own footprint by an average of 26% per year. But will that growth continue? We think the answer is yes.

Read back through our series on hyperscale data centers and you’ll notice the consistent reappearance of one word in particular: growth. With the creation of over 200 new hyperscale data centers between 2017-2020, the U.S., Europe, and Asia Pacific regions are experiencing a boom in hyperscale services.

But what about the future? Will the location strategy change over time, or can all parties and places expect continued expansion? And lastly, will the sustainability topic ever be fully answered? We sat down to look at the stats and see just what the future of hyperscale data centers may have in store.

How will hyperscale users continue to grow into the future?

Over the last five years, the top four hyperscale data center users have grown by an average of 26% per year. For this type of expansion to continue, a few things need to happen.

First, growth appears tied to the continual adoption of public cloud. Surveying the industry as a whole, it doesn’t seem like that growth has any plans to slow down. Hyperscale data centers continue to master the public cloud and cloud services industries as they also expand their business into other related verticals.

Second, there will continue to be tradeoffs in the hyperscalers who own vs. those who lease. Companies are leasing more as a percentage of their total, but it’s unclear if that balance will continue. The demand across hyperscale data centers is too great for only one of these options to grow. Hyperscale users are consistently growing at a speed that requires flexibility across centers, whether they own them or lease them.

Combine that with the fact that those doing the leasing from the data center operator perspective have gotten a lot better. Their facilities, their design, and their PUE, are capable of fitting the user footprint much better than they could five or ten years ago. So, while the percentage of owned vs. leased hyperscale data centers may change, it’s unlikely that we’ll ever see groups commit to one type of growth pattern ever again.

How will hyperscale location strategy change over time?

Looking at how the top four companies are utilizing hyperscale data centers across different cities, a few locations quickly rise to the top.

• Northern Virginia: 3,700 MW

• Des Moines: 591 MW

• Omaha: 400 MW

• Columbus: 392 MW

• Phoenix, Atlanta, and Dallas: 310-360 MW

• Prineville, Kennewick: 275-285 MW

While several places on this list are in what could be considered ​​non-traditional colocation markets, they’ve long had a large footprint compared to other cities that are closer to end users.

Places like Northern Virginia and Des Moines were cities who knew the impact that building hyperscale data centers would have on their overall economic growth. Now, others are starting to catch wind of what those places have long known.

For the future of hyperscale data centers, demand will be pushed more towards major colocation markets for several reasons. One, the cost of delivering to end users located far away is high. We will continue to see a trend of hyperscale data centers moving toward the people they serve. Combine that with the economic incentives being provided for new sites and it’s likely that the trend of additional growth in more traditional (at least from a multi-tenant perspective) data center markets will continue.

Kirk's background is in the U.S. military, serving as an electronics technician aboard the USS Memphis until the turn of the century. After getting out of the Navy, he started looking for career paths to plug himself into. He worked as a field service engineer while simultaneously getting his Bachelor of Business Management degree. Because the role involved traveling from site to site, he got to witness the building of multiple data centers and tech businesses in the early 2000s.

After graduation, he became the Southwest Regional Project Manager at EATON. Towards the end of his tenure there, he was diagnosed with cancer. As he was battling against the disease, he vowed to strive for something much bigger than his management role. With whatever time he had left, he wanted to master the skills that would put him on top of the industry.

He skipped around for the next few years, learning what he could from each company or contract as he went: EDSA Micro, HP, Modular Power Solutions, CyrusOne, NOVA Mission Critical, and Aligned Energy. He had opportunities to work with some of the best companies in the industry. He was also fortunate enough to remain healthy in the process of gaining this experience.

When Kirk had learned everything he could, all the while making some excellent industry contacts and lifelong friends, he was ready for the next step. In 2015, he became the Co-Founder of Data Center Austin Conference (DCAC). From there he didn't look back.

Later he expanded his grasp, becoming the CEO of OVERWATCH Mission Critical, which recently celebrated its second anniversary. Around half the staff is ex-military, driven and mission oriented. Sometimes their skill sets didn't apply directly to the industry, but their tenacity allowed these recruits to adapt to their new, fast paced industry even though it has such a high learning curve. One of their first clients, Compass Datacenters, helped them to set up the diversity and apprenticeship programs that shaped OVERWATCH's culture.

Why Does Ex-Military Apprenticeship Matter?

The common thread that runs through the soul of every ex-military person is drive. They spent years with concrete routines and long work hours, sometimes upwards of 100 hours a week even outside of combat environments. Transitioning to civilian life can leave these veterans without direction.

There’s a mental health crisis for a lot of veterans, with military suicides being four times more common than combat fatalities worldwide. Civilian life is simply a different universe. Direction and purpose are the keys to bridging these two lifestyles successfully.

Whether these veterans have experienced trauma during their service, or whether they’re just experiencing a massive culture shock that leaves them questioning their purpose and identity, a disciplined framework needs to go hand in hand with an understanding environment. This is why ex-military apprenticeship is so critical. It provides an all-important lifeline that will help them to achieve reintegration more successfully.

Interested in Hyperscale data centers? Sign up for our free hyperscale data center course:

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Or get a quick 15 minute demo of our platform:

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The Hyperscale and Enterprise Booms

The hyperscale sector was just starting to take on a life of its own when Data Center Frontier was founded. Rich says one of their first pieces was 'The Rise of the Cloud Data Center’. The two key components to that story were 'scale' and 'edge'.

Hyperscale players have been transformative, particularly because they allowed investors to understand data centers in a brand new way. Traditional real estate investors used to have a hard time getting into the old business model. But these days, hyperscale often presents single owner facilities with well respected tenants, all of whom have great credit histories and lots of assets. It is a much easier-to-understand proposal. The big investors bring not only the ability to take advantage of economies of scale, but they provide a kind of industrialization to the industry.

Rich says that what happened in 2020 paralleled the kind of events that happened in the 2009 financial crisis. Cash became king. Enterprises became more careful with their spending, and large organizations had to make touch investment choices.

2020 was a 'wait and see' time for them, and a lot of projects got put on hold. But in 2021, the faucet was turned back on. With more certainty into the future of tech, enterprise projects started to move forward again. The data centers that relied on enterprise business started to boom.

How the Data Center Services Market Has Changed

Rich says that one of the most interesting things about the industry is that when he’s talking to less technical people, he no longer needs to describe what a data center is. People have an understanding of how they're connected to the Internet, and how data centers can impact their lives. During the pandemic, the entire world relied on data centers in a new way: Zoom, online learning, remote healthcare, and immense E-commerce. Public officials in communities and smaller localities suddenly understood the importance and value of these places.

Carrier hotels were the centers of the old data center world. They were located next to the old Ma Bell facilities. But they tended to be in major population centers. Power and space were expensive. Thus, the shift into the suburbs in later years.

More recently, carrier hotels are back in vogue. In fact, some investment companies just buy up carrier hotels, upgrade them, and remarket them. A lot more capital has been flowing into that space recently.

What’s the Next Big Thing?

When asked about the tech that will most contribute to the growth of the data center services industry, Rich immediately went to artificial intelligence. Bottom line benefits and providing business value are the key drivers to AI adoption. Those desirable outcomes won’t change any time soon.

Really, AI is an infrastructure story. Given the plans Rich has heard about in recent virtual industry get togethers, some of the stuff in the AI hardware pipeline takes place at an unprecedented scale. So that's the biggest growth point to watch.

AR and VR are coming along more slowly. But they're resource intensive as well. So that's the next one to watch, along with autonomous tech like vehicles. Digital transformation and infrastructure will need to cope with the changes as demand ramps up.

Excited to provide our latest update on 3Q 2021 data center market trends. We’ll discuss our analysis in North America, Europe, and APAC markets.

🗓 Connect with our team: https://lnkd.in/epdNTezi

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🎓 Go through our data center fundamentals email course: https://lnkd.in/eH2sz_CJ

Interested in Hyperscale data centers? Sign up for our free hyperscale data center course:

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Other videos referenced:

Bruce Lehrman HawkTalk - https://youtu.be/fm4Tl4newI0

Colocation Done Right - https://youtu.be/ZQHZOh8orTU

Bill Fathers HawkTalk - https://www.youtube.com/watch?v=q6sBIBZTj-w

Why is Data Center Connectivity Important? - https://youtu.be/jl5zqFvH_zU

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1:15 - How will new technology enable modularity when constructing new data centers?

4:05 - As technology improves and density continues to grow, will large data centers ultimately become obsolete?

6:49 - How should you plan to manage a migration to cloud project?

9:55 - When a data center tenant is paying $100 per kilowatt, what all is included in that $100?

12:31 - What’s going on in the African data center markets?

15:46 - Can you explain data center tiering levels?

18:22 - What’s the value for a data center being near a subsea cable?

20:48 - Questions around the importance of connectivity