Hyperscale, Hyperspeed Hypercloud

The evolving dynamics of hyperscale data centers and hyperscale cloud

The hyperscale cloud continues to be at the center of the infrastructure services ecosystem. The COVID-19 pandemic has been the biggest challenge faced to date, and the early returns are encouraging. After three full quarters of the pandemic, the hyperscale cloud already shows signs of returning to its normal growth trajectory. And the recovery has moved more quickly than expected after growth rates dipped meaningfully during the height of pandemic lockdowns.

The hyperscale cloud continues to be beneficial for operating efficiency, scale and technology innovation. Margins are improving and profitability is rising. But, very little of this is coming off the table. The top-tier providers are in the game to win and have shown a strong commitment to re-invest in the business.

The hyperscale clouds are expanding their global infrastructure footprint, improving network performance and capacity and building onramps connecting to its platforms. Meanwhile, infrastructure expansion is accompanied by a relentless drive to innovate and build new features, tools and services that improve the end-user experience and contribute to efficiency and profitability. Looking at hyperscale clouds has a decidedly long-term view of the market. This is a once in a generation shift and the stakes are high.

Nearly all hyperscale platforms are seeing increased demand for digital transformation and infrastructure outsourcing, so economic recovery, when it comes, is likely to provide a spark.

Although growth is global in scope, Europe continues to be an emerging hotspot for hyperscale expansion. Activity in the top-tier markets remains strong and movement into secondary markets across the world is accelerating.

Hyperscale Cloud Data Centre Build Vs. Lease Trend

The pandemic has not only increased demand but it also has brought on meaningful levels of uncertainty for infrastructure planners to handle. What will this do to the hyperscale value chain? In the near future, it is likely to push demand more aggressively. Hyperscale clouds already plan ahead, but they now are going to do this with a completely different outlook. Uncertainty will motivate faster responses (i.e., faster hyperscale sales cycles) and there will be larger commitments made to future-proof against a prolonged pandemic and future outbreaks. AZ development has been sequential, especially in new markets, but clouds may look to change that timeline as the need for redundancy becomes more important. There is already movement on the ground. Hyperscale providers are moving faster to get builds done. Data center operators have accelerated procuring equipment and securing supply chains. There is a palpable sense of urgency, even as the environment makes things more difficult. Hyperscale is going to consume more now as unanticipated uncertainties are faced. What does that imply for the wholesale data center sector? Well, there is not going to be an oversupply situation anytime soon. Quality inventory, backed by competent operators with stable financial backing, will see a steady demand.

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