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Market Research Report

Australia Data Center Market - Growth, Trends and Forecasts (2020 - 2025)

Published by Mordor Intelligence LLP Product code 946352
Published Content info 120 Pages
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Australia Data Center Market - Growth, Trends and Forecasts (2020 - 2025)
Published: June 1, 2020 Content info: 120 Pages
Description

The Australia Data Center Market is estimated to grow at a CAGR of about 4.5% over the forecast period 2020 to 2025. The growth of the market can be attributed to the growing use of cloud services by organizations in both the private and government sector and the creation of infrastructure through cable networks. Further hyperscale public cloud service providers have been key in driving demand for data center services in Australia, particularly in the cities of Sydney and Melbourne.

  • The increasing data has raised the demand for data centers in Australia. According to Cisco, in Australia, IP traffic will reach 1.9 Exabytes per month in 2020, up from 711 Petabytes per month in 2015. Further, its IP traffic will reach an annual run rate of 22.5 Exabytes in 2020, up from an annual run rate of 8.5 Exabytes in 2015. Also, there will be 237.0 million networked devices in 2020, up from 130.4 million in 2015. With such data generation by increasing advanced technology such as cloud, IoT devices, and others, the demand for data centers significantly drives the market.
  • Further, with the advent of colocation services, it has become an attractive solution to many small-scale and hyper-scale players equally, as it allows organizations to address their storage issues without substantial upfront costs. Businesses can rent equipment, space, bandwidth, and other computing hardware to retail customers securing space for enterprise businesses. This capacity includes anything from cabinets to cages or private suites. Currently, there are a total of 117 colocation data centers located in 14 areas in Australia and are significantly expanding the facilities, which caters to the market growth.
  • Further, market players continue to receive orders during the Covid-19 outbreak. This has been confirmed by players like NextDC. Based on the strong level of orders already received for S2, NextDC is assuring that the projected demand in Sydney, together with their return expectations, is expected for the next phase of investment in Sydney's third generation of data centers. However, the company has further added that in the case of government inaction and a possible recession, the market is expected to get adversely impacted by the outbreak in the longer run.
  • Further, in the longer term, Melbourne-based IoT Data Centres (IOTDC) announced to open a new USD 77 million facility (10 facilities) in Australia's Northern Territory, due to be operational by early 2021. According to IOTDC, the new data center will also make the Northern Territory one of the first locations in the world to see an infrastructure upgrade to meet the additional capacity demand created by Covid-19.
  • Further, there are limitations on security features offered by data center service providers, which always give a possibility of a few sudden costs cropping up due to security problems that significantly cater to a challenge into market growth, mostly in SMEs.

Key Market Trends

Adoption of Cloud Computing Accounts for Signficant Share

  • The adoption of cloud computing has significantly driven the market for the data center. The adoption of SaaS services by SMEs is driving the Australian cloud computing market, where healthcare, retail, banking and insurance, mining, and public sectors are investing significantly in digitalization of their business operations. Government agencies are taking the initiative to digitize several sectors.
  • Players such as Macquarie Data Centers announced for three data centers to be built in Sydney, Australia, in 2020. The USD 80 million IC3 East data center will soon be located in the Macquarie Park Innovation District and planned for completion at the end of 2020. It will also increase its existing Macquarie Data Centre Campus capacity to the 43 megawatts and expects that the IC3 East data center will be an ideal facility for hyper scalers, software-as-a-service (SaaS) providers and global enterprises looking to capitalize on the expanding technology hub of Sydney and increasing adoption of cloud infrastructure in Australia.
  • Further, high-performance computing, including cloud computing, has led to an increase in the average power density requirements of data centers. Many end users now demand power densities of 8 kW to 20 kW per rack, with peak power requirements of about 50 kW per rack for higher-performance computing applications.
  • As Equinix is the largest data center provider in Australia, their 15 International Business Exchange (IBX) data centers in Sydney, Melbourne, Perth, Canberra, Adelaide, and Brisbane provides interconnection platform and is ready to enable new business opportunities providing high power density.
  • Equinix Cloud Exchange Fabric connects to the largest and growing, an ecosystem of service providers in Australia (275+ cloud providers). The city of Melbourne is increasingly experiencing digital transformation and is predicted to have a digital economy worth approximately AUD 51billion (USD 36 billion) in 2020 (source Equinix). Equinix's Melbourne data center campus enables companies to digitize their businesses by embracing cloud applications from more than 80 Cloud and IT service providers.
  • Furthermore, Government agencies are taking the initiative to digitize several sectors. The Australian government is investing around AUD 30 billion on high-speed internet access in multiple cities across the continent. Also, Australia Government Information Management Office (AGIMO) is leading the way in optimizing data center resources with the introduction of the Australia Government Data Centre Strategy 2010-2025.
  • Moreover, Hyperscale public cloud service providers are pivotal to boosting demand for data center services in Australia, particularly in Sydney and Melbourne. Several global public cloud providers (for example, AWS, Microsoft Azure) have expanded their wholesale data center capacities in recent years. For instance, in August 2019, Australian data center operator NextDC has opened a micro data center in Perth, creating a bridge between the 'small' infrastructure deployment and its larger 20MW hyperscale facility located in Western Australia providing connectivity requirements into critical public cloud services such as AWS Direct Connect and Microsoft Azure, as well as metro, national.

Renewable Energy Adoption in Data Center Witnesses a Significant Growth

  • Renewables are an important strategy to implement in the data center sector, from both a business and environmental perspective. Clean energy prices are less volatile than carbon-based sources, offering more sustainability. Also, 95% of data centers are old, small-scale operations. The average Australian data center is now over 20 years old, and most are inefficiently designed. Older in-house data centers increasingly require substantial upgrading to meet modern IT demands, while electricity costs have continued to rise in recent years. The investment in renewable capacity increases the scope of the data center facility to get equipped with this solution.
  • According to Melbourne's Deputy Lord Mayor, Arron Wood, the Melbourne Renewable Energy Project has united corporations, councils, and universities to source energy from a new Pacific Hydro facility. The project is an Australian-first demonstrating that large organizations can combine their funds to facilitate the development of clean energy plants. With only 17% of Victoria's power currently derived from renewable energy, there is considerable scope for growth in the sector for the data center.
  • Further, data centers are harnessing the power of renewable wind and solar energy, moving towards green data center facilities. In March 2020, Amazon announced its new renewable energy projects in Australia, supporting Amazon's commitment to reach 80% renewable energy by 2024 and 100% renewable energy by 2030, further with net-zero carbon till the year 2040.
  • Amazon's first renewable energy project in the country is 60 MW (megawatt) solar project anticipated to come in operation in 2021 in the northern New South Wales. The project is expected to generate approx 142,000 megawatt-hours (MWh) of clean energy annually equivalent to the annual electricity of almost 23,000 average Australian households.
  • A further player such as NEXTDC's active engagement in the direct procurement and investment in renewable energy procured a 400kW solar rooftop array in their M1 data center, which is the largest privately funded such array in Australia, responsible for 481.11 MW/h in renewable energy in recent years. It has been certified as Australia's first NABERS 5 star-rated data center infrastructure facility, demonstrating the performance achievable from comprehensive attention to energy efficiency with a PUE rating of 1.3 with sustainable free air-side cooling that reduces power consumption.
  • Also, Telstra announced an agreement for the ongoing energy supply from the new 429MW Murra Murra wind farm in Horsham. The facility, which is launched in 2019, generates more power than any other wind farm in the southern hemisphere. It is expected to reduce annual carbon dioxide emissions by 900,000 tons, and be capable of powering almost a quarter of a million homes.
  • Further hyperscale data centers are also investing in renewable energy solutions to reduce power consumption. In November 2019, AirTrunk aimed to develop a new 110 MW data center known as SYD2 in Sydney's North. SYD2 is backed by more than USD 1 billion investment from AirTrunk and is planned to open in 2020. The data center will deliver more than 110 MW of IT load over 4ha of land. It will be supported by a dedicated 132kV substation, allowing the most reliable power infrastructure at significantly lower electricity rates for customers.

Competitive Landscape

The Australia Data Center Market is competitive and fragmented as players are increasingly manufacturing new facilities in Australia, providing more offerings to end-users. Key players are NTT Communications Corporation, Equinix, Inc., etc. Recent developments in the market are -

  • February 2020 - Equinix, Inc., announced the opening of its fourth International Business Exchange data center in Melbourne, Australia known as ME2, where the new facility supports the growing demand for digital transformation globally, as well as Melbourne's smart city development and the interconnection needs of local customers, including The Salvation Army.
  • April 2019 - Canberra Data Centres begins its construction of a new facility in Sydney that has the capability to reach 120MW in capacity. The first launch of the new facility will offer 13MW of capacity. Canberra Data Centres acquired the former Hewlett-Packard center in Aurora, in Eastern Creek, on 15 hectares of land to start this construction.

Reasons to Purchase this report:

  • The market estimate (ME) sheet in Excel format
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Table of Contents
Product Code: 69936

Table of Contents

1 INTRODUCTION

  • 1.1 Study Deliverables
  • 1.2 Study Assumptions
  • 1.3 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

  • 4.1 Market Overview
  • 4.2 Market Drivers
    • 4.2.1 Increasing Rate of Data Traffic
    • 4.2.2 Adoption of Colocation Services For Cost Effective Solution
  • 4.3 Market Restraints
    • 4.3.1 Limitations on Data Security Features
  • 4.4 Industry Value Chain Analysis
  • 4.5 Industry Attractiveness - Porter's Five Forces Analysis
    • 4.5.1 Threat of New Entrants
    • 4.5.2 Bargaining Power of Buyers/Consumers
    • 4.5.3 Bargaining Power of Suppliers
    • 4.5.4 Threat of Substitute Products
    • 4.5.5 Intensity of Competitive Rivalry
  • 4.6 Assessment of Impact of Covid-19 on the Industry

5 MARKET SEGMENTATION

  • 5.1 By Service
    • 5.1.1 System Integration
    • 5.1.2 Monitoring Services
    • 5.1.3 Professional Services
  • 5.2 By Solution
    • 5.2.1 Power
    • 5.2.2 Servers
    • 5.2.3 Management Software
    • 5.2.4 Networking Technologies
    • 5.2.5 Cooling
  • 5.3 By Type
    • 5.3.1 Enterprise Data Centers
    • 5.3.2 Managed Services Data Centers
    • 5.3.3 Colocation Data Centers
    • 5.3.4 Cloud Data Centers
  • 5.4 By Industry Vertical
    • 5.4.1 Healthcare
    • 5.4.2 BFSI
    • 5.4.3 Government
    • 5.4.4 IT & Telecom
    • 5.4.5 Other Industry Verticals

6 COMPETITIVE LANDSCAPE

  • 6.1 Company Profiles
    • 6.1.1 NTT Communications Corporation
    • 6.1.2 Equinix, Inc.
    • 6.1.3 NEXTDC Limited
    • 6.1.4 Atos SE
    • 6.1.5 Fujitsu Ltd.
    • 6.1.6 Canberra Data Centres Pty Ltd.
    • 6.1.7 AirTrunk Operating Pty Ltd.
    • 6.1.8 Digital Realty Trust, Inc.
    • 6.1.9 Global Switch Limited
    • 6.1.10 Telstra Corporation Limited

7 INVESTMENT ANALYSIS

8 MARKET OPPORTUNITIES AND FUTURE TRENDS

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