Asia is the next big thing in global connectivity

Posted on September 26, 2018

Asia Connectivity

There perhaps was a time when Australian businesses could have felt a bit left out in the digital race. For much of its history, the IT sector seems to have been dominated by North America.

The US, of course, is home to Silicon Valley and all the tech giants that inhabit it, such as Apple, Cisco, and HP. But even before Silicon Valley, Americans were shaping the IT industry with the first computers and data centres.

All that is changing now. The centre of the IT universe is shifting to somewhere much closer to home: Asia.

According to research last year by PricewaterhouseCoopers Advisory Services (PwC), Asia’s data centre services market was worth $16 billion in 2016.

Half of this is thanks to Japan, which has the region’s most vibrant data centre services market by far, worth $8 billion in 2015. But other countries are also contributing to growth.

Indonesia, for instance, has a data centre services market that is expected to see a compound annual growth rate (CAGR) of 35 percent. China’s data centre services market is expected to experience the fastest absolute growth in the region.

Data centre services

Overall, Asia’s data centre services market is expected to grow 27 percent a year. This is well above the 12 percent growth rate predicted for North America, or the 13 percent rate seen in Europe. And it is being driven by four factors, PwC says.

The first is a surge in local data consumption. This is expected to rise at between 30 and 60 percent a year up until 2020, with even relatively mature markets such as Japan registering growth rates up to 40 percent.

Underlying this growth is a galloping increase in mobile data, with smartphone penetration set to rise from 43 percent in 2015 to 66 percent by 2020.

The second factor is that corporations are increasingly keen to outsource data centre services, with financial services sector companies leading the charge.

Third, global content providers such as Amazon and Netflix are more and more opting to host their data near the point of use, to reduce latency and improve the customer experience.

Latency is a big deal

Latency is a big deal for companies that deliver high-quality video. Sending traffic from the US to Singapore could take 179 milliseconds, according to Verizon Enterprise Solutions data from 2016. Sending it from Hong Kong would take just 33.

The final factor is the impact of government regulations. In Indonesia, for example, since October 2017 the law has said banks must store their data somewhere in the country.

Similarly, Singapore’s Personal Data Protection Act forbids companies from sending personal data outside of the country. Whatever the reasons, this concentration of data centre power on our doorstep can only be a good thing for Australian businesses.

It means we can enjoy super cheap, highly available computing power at very low latency. The only thing missing is a high-speed link between Australia and Asia Pacific. But here again, Australian businesses are in luck.

With the completion of the $180M Australia Singapore Cable, Australian businesses are now able to exploit the latest generation, low latency connections to Asia.

The upshot is you no longer need to be in North America to enjoy Silicon Valley-style data services. To learn more about what you could achieve with your network, talk to us today.

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