Cloud Services Drive AU & NZ Outsourced Data Centre Services Growth – Frost & Sullivan

The early and strong adoption of cloud computing of Australia and New Zealand has driven growth to their respective data centre services revenue as managed hosting services are also set to outpace co-location.

This is according to market research company Frost & Sullivan in their annual reports which form the Frost & Sullivan Australia and New Zealand Cloud, Data Centre and Infrastructure 2015 research program.

Power of Cloud Computing

The strong growth of outsourced data market was prompted by the consumer segments increased consumption of videos, social networks, mobile data and gaming, and the corporate sector’s use of data intensive applications. Its revenue was worth A$826 million in 2014, an increase of 18.3 per cent from the previous year. It is expected to peak this year and ease off in 2016 and 2017 as the rate of new data centre capacity entering the market slows down.

According to Frost & Sullivan’s new report Australian Data Centre Services Market 2015, data centre services revenue for 2015 is predicted to grow by 18.2 per cent, but even as managed hosting continues to see strong revenue growth, co-location revenue growth is beginning to ease as an increasing proportion of data centre clients migrate their co-location and managed hosting services to cloud services. This puts more pressure on wholesale data centre providers and those focusing only on co-location while providing plenty of opportunities for niche providers specialising in specific verticals.

Demand for Cloud Solutions

For New Zealand, the significant capital expenditure savings from using third-party data centres, coupled with the Government’s policies to adopt Infrastructure-as-a-Service (IaaS) have boosted the market growth. The report New Zealand Data Centre Services Market 2015 revealed that the market is expected to reach NZD$272 million by 2020. Strong growth of virtual private cloud services will see managed hosting growth outpacing that of co-location.

Frost & Sullivan Senior Research Manager for Australia and New Zealand Phil Harpur said, “Multiple, connected, multi-tenanted data centres are the most effective and cost-efficient way of providing these services. To achieve higher economies of scale, a model of fewer, larger, centralised data centres is ideal.  However, this is very difficult to achieve in New Zealand due to the relatively small size of the local market.

Larger IT services providers, such as IBM, are looking to consolidate their data centre footprint across both Australia and New Zealand into smaller numbers of larger, newer and more efficient data centres in centralised locations, often through leasing arrangements with specialist third party providers.”

As more companies migrate from co-location to cloud services and the rate of data centre capacity in the market eases, the Australian and New Zealand outsourced data centre market is expected to peak.

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