North America to ASIAPAC Data center market in AsiaPac to surpass North America by 2021

The APAC region is the fastest growing in terms of data center colocation revenue generated when compared to North America and Europe. With a market size of US$15.7 billion, the region is growing at 12.2 percent CAGR between 2019-2024 to US$28.0 billion. In contrast, North America and EMEA regions are growing at 6.4 percent and 11.1 percent respectively. The APAC region is projected to surpass the North America market in terms of market size by 2021 due to its combination of robust tier 1 markets like Tokyo, Singapore, Hong Kong and Sydney as well as emerging markets with notable upside potential. Markets such as Mumbai, Jakarta, Osaka and Seoul will eventually reach tier 1 market status in the next 5-10 years according to Structure Research’s latest 2020-2025 APAC Market Maturity Index Outlook

The COVID-19 pandemic continues to have a profound impact on all facets of life. It has brought on changes that have caused Internet usage to spike, and this in turn, has created demand for Internet infrastructure services. Hyperscale cloud has been the primary beneficiary. It hosts much of the infrastructure that supports the most widely used applications as well as the content being consumed on an elevated basis.

Hyperscale has driven demand to such an extent that countries like Japan and Australia (outside of China and India) are now home to two hyperscale markets. There is also an emerging tier of hyperscale markets such as Indonesia, South Korea and Malaysia. Self-builds remain rare across the region and this has created a steady stream of demand for wholesale data centre capacity.

Hyperscale cloud is also creating the conditions for interconnection to flourish. Organizations are moving workloads off-premise and into different infrastructure deployment models, with public cloud being a popular destination. This will create increasingly distributed architectures and bringing all this together is the ability to interconnect. IT decision-makers not only want to host critical infrastructure, but also figure out how to extend and take advantage of the public cloud. Data centre operators now have to tell both sides of this story.

While hyperscale continues to grow and expand, there is early movement out to edge locations. Some of these edge markets will coalesce around subsea cable landing stations and others will emerge around second tier locations. Investment capital and experienced operating teams are looking at these opportunities more closely and new providers are being formed.

Jabez Tan Head of Research Structure Research

Global pandemic interrupting supply chains: The global pandemic has created supply chain challenges as operators depend to a large extent on suppliers in Asia and particularly China. The supply chain opened up towards the end of 2Q20 but remains something operators are planning for and trying to get ahead of. Often the more challenging things are on the smaller end, around things like patch cables or cable trays, with providers in various countries single sourcing. This will change and providers are likely to try and de-risk supply chains across multiple geographies and away from heavy reliance on APAC.

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