With increased dependence of organizations on data & network virtualization for reduced operational spending, data center networking market has been traversing on a path of exponential growth lately. As experts predict the future to be dominated by smart cities, autonomous vehicles, intelligent services, mixed reality services and billions of IoT devices, it is evident that human lives will revolve increasingly around technology, augmenting the demand for data centers in particular. In recent times, advanced technologies like silicon photonics that offer mass-produced, inexpensive, and optical components through photonics integration, have been generating commendable opportunities for market players.
China data center networking market size, by end-use, 2017 & 2024 (USD Million)
Silicon photonics aside, technologies such as liquid cooling, blockchain, machine learning, and artificial intelligence are also expected to add to the growth graph of data center networking industry. Regions where the legacy IT estate has been less pervasive than highly developed regions are predicted to progress faster in the geographical landscape of data center networking market. A gist of the key regions, specifically APAC that will benefit from the comparatively less conspicuous presence of IT estates, enabling ground-breaking technologies to manifest themselves without hurdles has been outlined below.
An introduction to Asia Pacific data center networking market trends
APAC seems to have been depicting a contrasting trend as far as the progress of data center networking market is considered. On one hand, countries like Japan, Singapore and South Korea have been on the technologically advanced path to lead the continent, however, largely nascent markets like Myanmar, Vietnam and Malaysia are yet to progress in the regional sphere. Countries such as India and China though, are now remnant of a higher economy, connected lifestyles, and improved broadband infrastructure, and stand to contribute much to APAC data center networking
The Indian government has undertaken numerous initiatives to speed up the pace of internet in the country, keeping in mind the nation’s economic growth and international standing. Through campaigns like Digital India, the Indian government has ensured that government services can be accessed by citizens electronically. With regional authorities concentrating on improving the online infrastructure in the country, India ndustry size stood at $450 million in 2017.
China has been hailed as the sleeping dragon in APAC industry. Indeed, experts predict that the country is well on its way to emerge as one of the most prominent leaders in the technology cosmos after having observed the ambitious endeavors of Beijing to cement China’s position in the world stage. Just recently, tech giant Apple laid the foundation of its first data center in China at the Guian New Area to offer iCloud services in the country. Chinese internet behemoth Tencent also has recently commenced trial operations for one of its data centers in the Guizhou Province. This data center in fact, is estimated to store the company's most important data in the future.
By 2026, China’s GDP is expected to surpass that of the U.S. owing to its enormously developed IT, electronics, manufacturing, and construction industries. As the demand for data and network virtualization increase in the country, China data center networking industry will gradually observe a major incline over 2018-2024.
APAC has the advantages of an abundance of skilled labor, availability of components such as semiconductor chips and other low cost raw materials. In consequence, this has encouraged numerous industry players to establish their presence in this region, propelling APAC data center networking market size, slated to surpass $8 billion by 2024.
A gist of data center networking market outlook across Europe
A recent scoop that made the headlines in Europe data center industry recently is Google’s investment of an additional $177 million in the development of data centers in Ireland which will bring the investments in cloud infrastructure to a total of $593 million in Ireland. Countries like Ireland source a considerable part of their national income from organizations like Google, Facebook, Apple etc., that are renowned to establish data centers and other facilities in Ireland due to the country’s low corporate tax rates. The establishment is indicative of the fact that Europe industry, aided by the contribution of developed countries like Germany, France, Spain, and UK, will have much to contribute toward the global market share by 2024.
In the first quarter of 2018, hyperscale cloud and data center capex recorded a new high and reached $27 billion. The Q1 capex of 2018 was 80% higher than the Q1 capex of 2017, observing which analysts concluded that hyperscale spenders are reaching a historic high in the first 3 months of 2018. The five biggest spenders namely Google, Facebook, Apple, Amazon and Microsoft together spent $13 billion per quarter in 2017, though their aggregate spending in the first quarter of 2018 surpassed $20 billion. The statistics vividly underline the rising significance of infrastructure development in data center industry. As other notable companies like Tencent, JD.com, Alibaba and IBM aggressively invest in developing data centers and cloud infrastructure, data center networking industry will grow at a phenomenal pace, with a target valuation of $35 billion by 2024.