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IDC: APAC Market Conducive To Internet Data Center Growth

According to International Data Corporation's (IDC) David Yew, massive opportunities exist for Internet data centers and potential entrants across the Asia Pacific region, which will prove to be a market worth more than US$3.3 billion by 2005.

Yew, IDC's senior analyst for Channels and Alliances, credits the growth (from a US$713 million market in 2000 to a multi-billion dollar one in five years' time) to demand from companies in the communications, manufacturing, and banking and finance industries.

These industries will provide the impetus for the market to grow at a compound annual growth rate (CAGR) of 36 percent from 2000 to 2005, he added.

Although this growth will create significant opportunities for Internet data center vendors, no one player can lay claim to market dominance across the region.

"Besides the traditional services powerhouses of Australia and New Zealand, investment and development of Internet data centers have been occurring throughout PRC, India and Korea. Smaller nations like Singapore and Malaysia are also developing strategies at a national level to ensure that they win a share of this marketplace," Yew said.

The CAGR of Internet data centers in China is set to hit 84 percent from the 2000-2005 period, followed by India (56 percent) and Indonesia (45 percent). At the other end of the spectrum are countries with more mature markets such as New Zealand, Hong Kong and Australia, with predicted CAGRs of roughly 18 percent, 27 percent and 29 percent, respectively.

Singapore, Malaysia, the Philippines and Taiwan register a forecasted CAGR of about 30 percent, forming the middle tier of the overall ranking of 12 countries in the region, excluding Japan.

"Vendors and suppliers need to invest in and initiate dynamic programs to develop the Internet data center as a useful channel to market," Yew advised. "As it stands, the resale of hardware and software as a proportion of total business is almost negligible among Internet data centers in Asia Pacific."

The Internet data center is on the way to becoming an instrument for managing the core IT infrastructure for customers on an outsourcing or managed services model. Most already offer services such as the design, development and operation of network and IT systems required to support business operations.

"We are seeing more Internet data centers providing services that manage customer systems on a dedicated and customized basis, as part of its competitive set of utility-based offerings," Yew said.

All in all, Australia, Singapore and Korea look set to dominate the market with the region's "healthy demand for outsourcing and utility services," he added.