Paris Multi-Tenant Datacenter and Hosting Market

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1 MARKET FORECAST Paris Multi-Tenant Datacenter and Hosting Market MAR 2016 Penny Jones, Senior Research Analyst, European Services Rory Duncan, Research Director, European Services The third-largest multi-tenant datacenter and fourth-largest hosting market in Europe, the Paris metro market has fought hard to grow at the same rate as other primary European markets. Concerns over connectivity and reach into the rest of Europe and the French business environment have led international service providers and enterprises to consider Frankfurt and London over Paris for hosting data assets. However, localized business is strong, and this has helped Paris retain its position above Amsterdam as a city location, despite the Netherlands favorable connectivity RESEARCH, LLC

2 ABOUT 451 RESEARCH 451 Research is a preeminent information technology research and advisory company. With a core focus on technology innovation and market disruption, we provide essential insight for leaders of the digital economy. More than 100 analysts and consultants deliver that insight via syndicated research, advisory services and live events to over 1,000 client organizations in North America, Europe and around the world. Founded in 2000 and headquartered in New York, 451 Research is a division of The 451 Group Research, LLC and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication, in whole or in part, in any form without prior written permission is forbidden. The terms of use regarding distribution, both internally and externally, shall be governed by the terms laid out in your Service Agreement with 451 Research and/or its Affiliates. The information contained herein has been obtained from sources believed to be reliable. 451 Research disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although 451 Research may discuss legal issues related to the information technology business, 451 Research does not provide legal advice or services and their research should not be construed or used as such. 451 Research shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. NEW YORK SAN FRANCISCO LONDON BOSTON 20 West 37th Street 3rd Floor New York, NY P F Geary Street 9th Floor San Francisco, CA P F Gower Street London, UK WC1E 6HH P +44 (0) F +44 (0) Liberty Square, 5th Floor Boston, MA P F ABOUT THE AUTHOR PENNY JONES SENIOR RESEARCH ANALYST, EUROPEAN SERVICES As Senior Analyst for 451 Research s European Services channel, Penny provides insight into the European multi-tenant datacenter and colocation markets; European Web, application and managed hosting markets; European cloud (IaaS, PaaS & SaaS) markets; and Internet exchanges and content delivery network (CDN) markets. RORY DUNCAN RESEARCH DIRECTOR, EUROPEAN SERVICES As the Research Director for 451 Research s European Services channel, Rory provides insights into the European multi-tenant data centre and colocation services markets, European web, application, and managed hosting services, European cloud (IaaS, PaaS & SaaS) services, internet exchanges and content delivery networks. II

3 Key Findings France is still feeling the effects of the economic crisis, though the economy has seen some growth in The MTDC market, however, is slow to invest, with many providers putting expansion projects on hold due to oversupply and slow demand in the market. EU data regulations, the removal of the US Safe Harbor agreement and a new EU-US Privacy Shield are likely to have a strong effect on the French markets for managed hosting and colocation. We expect French data regulations will be among the toughest in Europe potentially going against government moves to make France a more friendly place in which to do international business. The Paris market has a large number of MTDC operators, many of which operate with more than one facility. Most datacenters are located outside the inner-city ring road, and a high concentration can be found to the north of the city. It is also home to some leading pan-european and global hosting players, including OVH and Orange Business Services. Equinix s merger with TelecityGroup has created a new MTDC leader (by operational supply) in Paris. Equinix will now have a 2% lead on its closest rival, Interxion, with 20% of the supply in the market. The deal could lead to more stabilized pricing, creating a high-end competitor that will focus on options for interconnectivity. III

4 Executive Summary INTRODUCTION Of the four key European metro markets London, Frankfurt, Paris and Amsterdam for hosting and multi-tenant datacenter (MTDC) services, Paris is the smallest in terms of opportunity. However, France is the world s fifth-largest economy, and the country has the second-largest consumer market in Europe. Services generate 80% of the country s GDP; the largest sectors are aerospace, nuclear, agri-food, chemical, ICT and pharmaceuticals. France is also a leading European financial center and Paris dominates as a primary business location, masking the highly provincial nature of life in the rest of the country. Regionalized banking, a huge rural economy and diverse political views create business divisions within France s own borders. Despite the dominance of domestic players, some pan-european providers e.g., Claranet have established a foothold through organic as well as inorganic growth. Frankfurt, by contrast, has seen much stronger demand due to its central European location, and the UK benefits due to its reputation for ease of conducting international business. France also has one of the most traditional cultures in Western Europe and is often the slowest to accept change. As France increases its efforts to hold on to its distinctive language and culture in the face of the increasing anglicizing of the Internet, its hosting market faces similar challenges. With a growing population of about 23.4 million (12.1 million of whom reside in the city metro), Paris offers enough internal opportunity to keep the wheels of its MTDC and hosting markets turning. A large number of multinational corporations are headquartered in the city: 29 of these are Fortune 500 companies, including AXA, BNP Paribas, Orange, Sanofi, Bouygues and Peugeot. France has a strong telecommunications and media industry, and in recent years many of its IT services providers transitioned into significant colocation, hosting and cloud providers to meet French business demand. Elsewhere, Parisian companies are increasingly adopting dual datacenter strategies, in turn driving demand further from the city center and into the city s perimeters. Disaster recovery is a key requirement as companies look to upgrade their own datacenter infrastructure, seeking lower costs through the use of renewable energy, cheaper land prices and moving away from the highly competitive Paris city center market. However, many find a presence is still required for connectivity into the major carrier hotels in particular Telehouse s Voltaire site (Telehouse 2). At the beginning of 2016, Paris was still the third-largest MTDC market in Europe by operational square feet. The location is well-populated with a strong mix of local and international providers covering both the wholesale and retail spaces. Growth in the MTDC market was strong up until 2012, but following the European economic crisis from which France is still recovering and an influx of new supply leading to price constraints, providers have taken a somewhat hesitant approach to the market. Many have pulled the brakes on build plans as they wait for prices to rise and demand to grow, and many are waiting to see what the impact of market consolidation will be following Equinix s purchase of TelecityGroup. IV

5 PARIS MULTI-TENANT DATACENTER AND HOSTING MARKET METHODOLOGY The data in this report was assembled in part through the use of 451 Research s Datacenter KnowledgeBase, which tracks hundreds of companies in the space, including product mix and regional market shares. Our methodology includes tours of many of the datacenters in the markets, surveys of datacenter providers, phone briefings and data collection from competitors. 451 Research also interviews real estate professionals as part of our research. This report was written by: Penny Jones, Senior Research Analyst, European Services Rory Duncan, Research Director, European Services 451 Research client input and comments on this report are encouraged. Any questions about the methodology should be addressed to datacenter@451research.com. In cases where metrics are not available from the company, we have used general industry averages and assumptions. The report identifies all datacenter providers discovered by 451 Research in each market, except for those with less than 1,000 square feet of space, and estimates market share for the top three to five providers in each area. Market share is calculated based on operational square footage. For wholesale providers that also lease to retail colocation providers, such space is counted only once in this report as the colocation provider s space since they are selling to the end customer. In other words, this report depicts market share from the viewpoint of the customer that leases space. The only exception is for the wholesale market share graphs, where retail space is not subtracted in order to give a clearer sense of the true wholesale market share. This report uses the most up-to-date information received from datacenter providers to estimate market sizes, supply, demand and utilization figures. Figures in this report represent year-end numbers and can differ from previous editions of our reports due to more disclosures received from more providers. The maps in this report may not reflect all datacenter facilities in a particular market because not all datacenter providers disclosed addresses for all facilities, but do include the majority of facilities. For this report, sizing of datacenter markets includes only facilities located within roughly a 50-mile radius from each city center. Datacenter supply and demand is often referred to in the industry in terms of power available (typically in megawatts, MW), and we expect to convert our graphs to MW eventually. However, not all datacenter providers have given us power metrics and, even when obtained, such metrics can be difficult to confirm (particularly for utilization). Thus, for the time being, we continue to show supply and demand in terms of operational square footage. V

6 Table of Contents 1. THE PARIS MTDC AND HOSTING MARKET 1 MULTI-TENANT DATACENTERS PARIS MTDC MARKET, Q Figure 1: Datacenter Hubs in and Around Paris MANAGED HOSTING & CLOUD WEB & APPLICATION HOSTING COMPETITIVE OVERVIEW 5 MARKET Figure 2: 451 Research European Services: Paris Market Map MARKET SHARE LEADERS AND EMERGING COMPETITION Figure 3: Top Providers in Paris MTDC Space (by Sq Ft) WHOLESALE DATACENTER SPACE Figure 4: Top Wholesale Providers in Paris MTDC Space (by Sq Ft) Figure 5: Location of Notable Wholesale MTDC Providers for the Paris Market Digital Realty Global Switch DATA RETAIL MULTI-TENANT COLOCATION Figure 6: Top Retail Providers in Paris MTDC Space (by Sq Ft) Figure 7: Location of Notable Retail Colocation Providers for the Paris Market Equinix Interxion KDDI Telehouse Iliad SFR VI

7 PARIS MULTI-TENANT DATACENTER AND HOSTING MARKET HOSTING OVH OBS Gandi Amen (Dada Group) Claranet (Typhon/Grita) Ecritel MTDCS 16 SUPPLY & DEMAND Figure 8: MTDC Total Supply, Paris Figure 9: MTDC Supply/Demand and Utilization, Paris UTILIZATION PIPELINE HOSTING 19 SUPPLY DEMAND Figure 10: Paris Hosting Market Size and Growth DISRUPTIVE TRENDS 21 BUSINESS TRENDS AND THE DIGITAL ECONOMY M&A AND SERVICE CONSOLIDATION PHYSICAL SECURITY AND DATA PROTECTION CLOUD AND IAAS ADOPTION IN FRANCE INFRASTRUCTURE DEPENDENCY VII

8 PARIS MULTI-TENANT DATACENTER AND HOSTING MARKET 6. IMPLICATIONS AND OUTLOOK 24 IMPLICATIONS OUTLOOK TERMINOLOGY TAXONOMY 26 MULTI-TENANT DATACENTERS RETAIL COLOCATION WHOLESALE DATACENTER INTERCONNECTION MANAGED HOSTING INDEX OF COMPANIES 28 VIII