New Zealand's Data Centre Services Market Driven by Demand for Cloud Solutions, says Frost & Sullivan
~ Managed hosting services to outpace co-location; $272 million market value by 2020 ~
AUCKLAND, New Zealand, Sept. 17, 2015 /PRNewswire/ -- New Zealand is a relatively early adopter of cloud services but the significant capital expenditure savings from using third-party data centres, coupled with the Government's policies to adopt Infrastructure-as-a-Service (IaaS) has provided strong stimulus, particularly in the corporate sector and SME market.
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Whilst the corporate sector has increased use of data intensive applications such as data mining and data analytics, consumer segments have increased consumption of videos, social networks, mobile data and gaming. These factors have resulted in a need for increased amounts of data storage and computing capacity in New Zealand's data centres.
The New Zealand data centre services market grew 16.4% over 2013, and in 2014 totalled NZD$118 million. According to Frost & Sullivan's new report, New Zealand Data Centre Services Market 2015, a growth of 18% in data centre service revenues is forecasted for 2015 with managed hosting recording stronger growth than co-location which will ease with the increased migration to cloud services. 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.
Phil Harpur, Senior Research Manager, Australia & New Zealand ICT Practice, Frost & Sullivan said that after the Christchurch earthquake, there has been increased concern over the impact of external events on business operations, resulting in a growing demand for disaster recovery and business continuity services.
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 New Zealand data centre customers adopt cloud services for a growing portion of their overall IT service needs, they migrate from co-location services and managed hosting to cloud services, with some companies migrating from on-premise IT systems directly to private cloud services, negating the need for core data centre services," Harpur added.
Data centre services are in high demand from the Telco/IT Services sector as cloud providers and IT service providers grow their cloud service offerings. High growth in data traffic over the last few years has also see the Internet / Media industry displaying robust growth in use of data centre services. Digital Media organisations were amongst the first category to migrate to public clouds and will be a key driver of growth within data centres over the next five years, as services such as online video and online gaming become more popular.
The Education vertical has increased adoption of outsourced data centre services, although a relatively slow adopter of cloud services compared to some overseas markets. Most New Zealand educational institutions still have a significant proportion of their IT systems on-premise, though a few of them, such as the Christchurch PolyTechnic Institute of Technology, have adopted the cloud relatively fast.
There are 3 major categories of outsourced data centre providers in the New Zealand market:
- IT Service Providers account for the largest segment in the market and often lease wholesale or co-location space to smaller local cloud providers. Datacom and IBM are the two largest providers.
- Telcos operating in New Zealand that own their own data centres include Spark Digital (which dominates this market segment), Vocus, Vodafone and Vector.
- Specialist data centre providers are carrier neutral and generally have a high level of expertise in the data centre services industry. Due to the relatively small size of the New Zealand market, the specialist data centre providers segment is relatively small and under-developed. The major local provider, Revera, has been acquired by Spark Digital.
The average power density requirement of data centres is now up to 30KW to 40KW per rack and continues to increase in line with the increasing demand for high-performance computing applications. As rack densities decrease, physical data centre space needed declines. This trend impacts data centre providers offering co-location services on both a retail and wholesale level.
Data centre providers have several challenges. Securing sites in CBD locations (where property prices are at a premium and continue to rise; especially in Auckland), and gaining access to sufficient power is increasingly challenging. New Zealand's relatively small market size and the lack of suitable locations to build additional capacity exacerbate this issue making it increasingly difficult for data centre owners to plan for additional capacity.
Frost & Sullivan's New Zealand Data Centre Services Market 2015 forms part of the Frost & Sullivan Australia and New Zealand Cloud, Data Centre and Infrastructure 2015 research program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. If you are interested in more information on these studies, please send an e-mail with your contact details to Donna Jeremiah, Corporate Communications, at djeremiah@frost.com.
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Contact:
Donna Jeremiah
Corporate Communications – Australia & New Zealand
P: +61 (02) 8247 8927
E: djeremiah@frost.com
Andre Clarke
Country Manager, New Zealand
P: +64 9 9030076
E: andre.clarke@frost.com
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