Data Centers. GE Capital. Industry Research Monitor. Key Developments. U.S. Data Center Square Footage to Continue Rising

Transcription

1 September 213 Industry Research Monitor Data Centers Key Developments Demands on the ever-growing complexity of data center assets continue to evolve as mobile broadband expands, big data analytics becomes more prominent, social media attempts to replace basic as the holy grail for marketers and cloud services become more entrenched in both consumer and corporate America. While specific markets may see softness intermittently, overall trends continue to favor outsourced data center expansion as increasing technology complexity and capital expenditure constraints weigh on companies. The top U.S. markets continue to demonstrate high capacity utilization by third-party multitenant data center operators as increased demand from new services continue unabated. Global demand growth continues to outpace global supply growth. Both internal and external data centers are expected to see the bulk of their expansion in the larger data centers. U.S. Data Center Square Footage to Continue Rising U.S. Data Centers 8 Source: IDC Million square feet Data center demand is expected to continue to increase in the coming years, driving higher data center capacity needs, while concurrently shifting internal data center capacity to external, third-party, service provider operated data centers. Total U.S. data center capacity is anticipated to increase at a 3.6% CAGR between 212 and 216. However, third-party service provider square footage is anticipated to increase at a 15.1% CAGR during the same period Internal U.S. Data Centers (in millions of sq ft) Service Provider U.S. Datacenters (in millions of sq ft) Industry Research Update: Data Center 1 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

2 Trends Continue to Favor Multi-Tenant (Service Provider) Expansion September 213 While specific markets may see softness intermittently, overall trends continue to favor outsourced data center expansion as increasing technology complexity and capital expenditure constraints weigh on companies. Top U.S. markets continue to demonstrate high capacity utilization by third-party data center operators. Global demand growth continues to outpace global supply growth in the top markets. Average Multi-tenant Data Center Utilization in Top 1 US Markets 95% Source: The 451 Group, Dec 212 North American Multi-Tenant Data Center Revenue 9% 85% 8% 75% 7% Average MTDC Utilization in the Top 1 US markets U.S. Hosting Infrastructure Services Revenue Top Global Markets Multi-Tenant DC Supply/Demand Growth U.S. Hosting Infrastrucutre Services Revenue ($ Millions) 18, 16, 14, 12, 1, 8, 6, 4, 2, Legacy shared & virtual private server Complex managed Dedicated Source: IDC 2 Colocation Multi-tenant capacity utilization in the top 1 US markets is forecasted to continue to rise through 214, according to The 451 Group, as demand growth continues to outpace the growth in supply. GECA believes this dynamic should lend itself to price stability in these markets over the next several years. We would note that projections are based on announced pipeline activity, while In all likelihood, there will be additional pipeline activity that has not yet been publicly announced by providers. Total U.S. hosting infrastructure services revenue is expected to grow at a 7% CAGR from 212 through 217, with revenue growth from colocation and complex managed hosting leading the way. Globally, data center demand is expected to continue to outstrip global supply through at least 214, although we would caution that the data center industry is market dependent and product dependent. Therefore, any specific market may be over or under supplied during a given period and retail colocation demand is not a substitute for wholesale colocation. North American multi tenant data center revenues are forecasted to rise at an 18.6% CAGR between 212 and 214, according to The 451 Group, reaching revenues well over $12 billion. Industry Research Update: Data Center 2 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

3 Multi-Tenant Service Provider Data Centers to Take Center Stage September 213 The total number of internal datacenters is forecasted to contract through 216, while outsourced service provider data centers are anticipated to see expansion of both number of data centers as well as square footage. # of U.S. Data Centers (in millions of sq ft) Internal U.S. Data Centers (# of data centers) 3, Source: IDC3 2,5 2, 1,5 1, Internal U.S. Data Centers (# of data centers) Internal U.S. Data Centers (in millions of sq ft) 7 Source: IDC # of U.S. Datacenters (in millions of sq ft) Service Provider Data Centers (# of data centers) 25 Source: IDC Service Provider U.S. Datacenters (# of data centers) Service Provider U.S. Datacenters (in millions of sq ft) 12 Source: IDC Internal U.S. Data Centers (in millions of sq ft) Service Provider U.S. Datacenters (in millions of sq ft) The total number of internal data centers is expected to shrink through 216, although high-end data centers are the only sub-segment expected to see expansion in numbers. High end data centers are defined as a primary server location for an organization that comprises a room, often in excess of 2, square feet with advanced cooling systems, redundant power and protected by multiple levels of security. The room tends to support between 5 to over 1, servers installed. With demand expected to continue rising, both internal and external service provider data center are forecast to increase square footage in the U.S. While internal data centers currently comprise more total square footage, they are anticipated to increase at a 2% CAGR versus external, third party data centers that are anticipated to increase square footage at a 15.1% CAGR between 212 and 216. Industry Research Update: Data Center 3 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

4 Data Centers Will Continue to Evolve with Growth Accruing to High-End Data Centers September 213 Despite shrinking in total number, internal data centers are expected to evolve as smaller data centers give way to larger, more cost effective larger high end data centers. Third-party service provider data centers are anticipated to see a similar shift between 29 and 216. Internal Data Centers, 29 (millions of Sq Ft) Internal Data Centers, 216 (millions of Sq Ft) Source: IDC7 17% Source: IDC8 14% 26% 4% 9% 33% 7% 41% External Service Provider Data Centers, 29 (millions of Sq Ft) 7% 6% External Service Provider Data Centers, 216 (millions of Sq Ft) Source: IDC9 18% Source: IDC1 7% 1% 2% 49% 1% 24% 3% 6% 8% Average Square Feet of High-End Data Centers U.S. Average Data Center Capacity ('s) Source: IDC High-end Internal datacenter High-end SP datacenter While both internal and external data centers operators commit capital to build larger data centers the average square footage of the larger data centers are also expected to continue increasing At the same time, smaller data center square footage is expected to decline, on average, through 216. Industry Research Update: Data Center 4 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

5 Factors Influencing Data Center Demand Growth September 213 Multiple factors continue to influence rising demand for data center space digital information is becoming ubiquitous, connected devices proliferate with ever-faster transmission speeds and analytics of existing data, both structured and unstructured becomes more pronounced. U.S. High Speed Data Subscribers (not including enterprise) US high speed subscriber penetration continues to climb, expected to increase at a 3% CAGR through 217, according to SNL. This data does not capture enterprise consumption as well as faster data transmission within the HSD subscriber set. Worldwide Connected Devices 6 Source: Cisco, 211 in millions % CAGR '1-'2 in Number of Connected Devices The total number of devices worldwide that are connected to the Internet is forecasted to increase at a 15% CAGR during the current decade, driving the need for increase computing power. At the same time, the number of connected devices per person will increase from less than 2 in 21 to nearly 7 by WW Connected Devices Population Connected Devices / Person TBs per month North American Mobile Data Traffic Forecast 2,1, Source: Cisco VNI, 213 1,8, 1,5, 1,2, 9, 6, North American mobile data traffic is exploding, expected to increase at a 56.5% CAGR between 212 and 217. Driving the exponential growth are increased data transmission rates, increased use of thin client devices and a more mobile workforce. 3, North American Mobile Data Traffic Industry Research Update: Data Center 5 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

6 Spending Growth in Cloud & Big Data Sets a Foundation for Data Center Demand September 213 US Cloud Services Revenue ($M) Worldwide Big Data Technology Revenue ($M) WW Capital Spend on Servers and Storage to Support Big Data 12, Source: IDC12 1, 8, 6, 4, 2, Servers Storage Cloud infrastructure US Public IT Cloud Services Revenue 5, Source: IDC13 4, 3, 2, 1, Capital spend on server, storage and cloud infrastructure for purposes of supporting Big Data efforts on a global basis are anticipated to increase at a 37.6% CAGR between 212 and 216 and with it, comes increased demand for housing the incremental equipment at a data center. Corporations are increasingly digitizing and analyzing all forms of structured as well as unstructured data for purposes of competing both locally and globally. US public cloud service revenue is forecasted to increase 16.2% between 212 and 217, with growth of software as a service and infrastructure as a service trailing platform as a service. Cloud services are expected to continue to grow as technology complexity evolves with an increasing array of both applications and devices being utilized by an increasingly mobile workforce SaaS PaaS IaaS Declining US Market Share of WW Public Cloud Service Revenue 7% 6% 5% 4% 3% 2% 1% % Source: GECA Analysis based on IDC Data US Market Share of WW Public Cloud Service Revenue US public cloud service revenue is anticipated to increase at a slower pace than worldwide adoption as the early innovation and adoption that began domestically begins to witness increased traction on a global basis. Industry Research Update: Data Center 6 Copyright 213 General Electric Capital Corporation, All Rights Reserved.

7 September 213 GE Capital, Americas Strategic Marketing, Industry Research Contact Ben Abramovitz, CFA Telecommunications & Media Sources 1. IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Hosting Infrastructure Services Forecast #24897 May IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, U.S. Da tacenter Forecast #2377 September IDC, WW Big Data Technology & Services Forecast #238746, Dec IDC, WW & Regional Public IT Cloud Services Forecast # Aug IDC, WW & Regional Public IT Cloud Services Forecast # Aug 213 Disclaimer: Although General Electric Capital Corporation ( GE ) believes that the information contained in this newsletter has been obtained from and is based upon sources GE believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. GE makes no representation or warranties of any kind whatsoever in respect of such information. GE accepts no liability of any kind for loss arising from the use of the material presented in this newsletter. This newsletter is not to be relied upon in substitution for the exercise of your independent judgment or legal advice. GE Capital is an extension of GE s rich heritage of building and supporting growth. Investing in the sectors we know best, we can provide more than just financing: We bring insight, knowledge and expertise to every loan. And as a result, businesses that finance with GE Capital benefit from the global know-how and expertise of GE. gecapital.com 213 General Electric Capital Corporation. All rights reserved. This publication provides general information and should not be used or taken as business, financial, tax, accounting, legal or other advice. It has been prepared without regard to the circumstances and objectives of anyone who may review it; therefore, you should not rely on this publication in place of expert advice or the exercise of your independent judgment. The views expressed in this publication reflect those of the authors and contributors and not necessarily the views of General Electric Capital Corporation or any of its affiliates (together, GE ). GE does not guarantee that the information contained in this publication is reliable, accurate, complete or current, and GE assumes no responsibility to update or amend the publication. GE makes no representation or warranties of any kind whatsoever regarding the contents of this publication, and accepts no liability of any kind for any loss or harm arising from the use of the information contained in this publication. GE, General Electric Company, General Electric, General Electric Capital Corporation, the GE Logo, and various other marks and logos used in this publication are registered trademarks, trade names and service marks of General Electric Company. You may not use, reproduce, or redistribute this publication, any part of this publication, or any trademark or trade name without the written permission of GE. Industry Research Update: Data Center 7 Copyright 213 General Electric Capital Corporation, All Rights Reserved.