Amsterdam Multi-Tenant Datacenter and Hosting Market

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1 MARKET FORECAST SEP 2015 Amsterdam Multi-Tenant Datacenter and Hosting Market Penny Jones, Senior Research Analyst, European Services Rory Duncan, Research Director, European Services For centuries, the Netherlands has been one of the world s leading countries for trade, and while Amsterdam s Golden Age ended in the 17th century, it has seen something of a renaissance. A strong foundation for a growing multi-tenant datacenter and hosting market has emerged in the last two to three years. However, Amsterdam faces potential stagnation as leading European hosting and datacenter markets vie for both international and European business 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 AUTHORS PENNY JONES SENIOR 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 Amsterdam s hosting and MTDC market is still driven largely by connectivity, a favorable business environment and skills: The city s focus on energy-efficient datacenter designs, low power usage effectiveness (PUE) and reduced energy use drive an innovative approach that is attractive to many end-user customers. International hosting providers and a small number of regional giants dominate the managed hosting and Web and application market, while the MTDC market is primarily retail colocation-based, with few pure-play providers offering deals at the wholesale end of the market. The Amsterdam MTDC market saw 75,462 square feet of space added to the market in 2014, and in 2015 expectations are for another 128,986 square feet to come online. However, construction is slowing as the market weathers uncertainty over the consolidation of Equinix and TelecityGroup and increased competition from other European cities. Demand from US-based service providers and enterprises continues to rise, and we believe Asian providers and enterprises will account for a new wave of opportunity in the years ahead. III

4 Introduction EXECUTIVE SUMMARY The Netherlands is home to one of the world s leading Internet exchanges AMS-IX and is a landing point for 11 out of 15 transatlantic subsea cables. Its capital city, Amsterdam, has benefited significantly from the growth of the Internet and today the city is home to a rich, vibrant array of multi-tenant datacenter (MTDC) and hosting providers, as well as a global contingent of end users that range from the financial services industry to cloud service providers. While challenges do exist in the market in 2015, Amsterdam s overall maturity in terms of connectivity and the quality of its infrastructure should be enough to allow the city to maintain a position as a tier one datacenter and hosting market in Europe for the next 5-10 years. Amsterdam s reputation as a location for hosting data has been largely focused on connectivity. The Netherlands is the second most densely cabled country in the world, and fiber has created a foundation for a thriving hosting and datacenter services industry. The country is home to 33% of Europe s MTDCs (by operational square feet) and has attracted business from a number of leading cloud and IT service providers including Google, Facebook, Netflix, Akamai, Microsoft, Oracle, SAP and Cisco. For these technology vendors, Amsterdam is a perfect location, straddling Germany and Belgium and only a short hop away from Europe s biggest market London. 451 Research tracks 53 MTDC facilities in the Amsterdam market, 19 of which provide access to more than 30 carriers through interconnectivity (10 offer access to 50 or more). In the past eight years, Internet exchange provider AMS-IX has seen traffic grow 13 times, with 30% growth recorded in 2014 alone. Although AMS-IX has rolled out platforms in the US, Hong Kong and the Caribbean, the majority of its traffic is still measured on its Amsterdam platform with 80% of this coming from global customers providing Web and application hosting, managed services, colocation, cloud platforms and other data-hungry services. Of the 650 petabytes of monthly traffic that AMS-IX records, 12% of the provider user base comes from the US, 20% from the Netherlands, 8% from Germany and 8% from France. AMS-IX is also seeing a growing amount of traffic originating from China and the Middle East. Turkish telco Turk Telekom, for example, peers with other providers from Turkey through AMS-IX instead of sending traffic back over the Internet into its own country. Traffic from these regions will grow in coming years as Asian and Middle Eastern service and telecommunications providers look to launch services into Europe and extend coverage for customers requiring reach into new locations. Aside from a strong financial services sector (which employs about 10% of the city s workforce), more than 2,500 international companies have invested in the Amsterdam metro region, employing more than 250,000 experienced ICT professionals. Many of these companies are attracted to the overall business climate in the Netherlands. It is one of the few Eurozone countries to not experience any significant GDP fallout from the recent economic crisis at its peak in 2009, its growth rate was higher than Germany s. The Netherlands also treats international companies well. It has a competitive 20% corporate income tax rate, has tax agreements in place with most of the world s leading trading nations and is open to foreign investment a legacy carried on from its position as a world trade hub. Technical skills are high a reason why USbased SingleHop chose to locate its European operations in the country in However, there are some physical challenges for datacenter operators and hosting providers in Amsterdam that are linked to the city s geography. Similar to the headaches caused by Victorian sewers and plague-era burial grounds in London, Amsterdam s heritage-listed canal streets do not lend themselves to large construction projects, including the laying of new fiber. Design and build challenges have led a number of providers hosting and MTDC to seek locations outside the city limits. As a result, the Amsterdam hosting and MTDC market extends to Haarlem in the east where KPN (Getronics) and EvoSwitch operate colocation facilities, to Almere in the West, where Keppel has its facilities and where IBM provides cloud services from its SoftLayer datacenter. IV

5 AMSTERDAM MULTI-TENANT DATACENTER AND HOSTING MARKET EXECUTIVE OVERVIEW 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 AMSTERDAM MTDC AND HOSTING MARKET 1 Amsterdam MTDC Market, Q MULTI-TENANT DATACENTERS Figure 1: Datacenter Hubs In and Around Amsterdam MANAGED HOSTING & CLOUD HOSTING WEB & APPLICATION HOSTING COMPETITIVE OVERVIEW 4 MARKET MAP Figure 2: 451 Research European Services: Amsterdam Market Map MARKET SHARE LEADERS AND EMERGING COMPETITION Figure 3: Top Providers in Amsterdam MTDC Space (By Sq Ft) Figure 4: Top Wholesale Providers in Amsterdam MTDC Space (By Sq Ft) Figure 5: Location of Notable Wholesale MTDC Providers for the Amsterdam Market Figure 6: Top Retail Providers in Amsterdam MTDC Space (By Sq Ft) Figure 7: Location of Notable Retail Colocation Providers for the Amsterdam Market MTDCS 13 SUPPLY & DEMAND Figure 8: MTDC Supply/Demand and Utilization, Amsterdam UTILIZATION PIPELINE Figure 9: Announced Pipeline Amsterdam HOSTING 15 SUPPLY DEMAND Figure 10: Benelux Hosting Market Size and Growth VI

7 AMSTERDAM MULTI-TENANT DATACENTER AND HOSTING MARKET EXECUTIVE OVERVIEW 5 DISRUPTIVE TRENDS 17 NEW LOCATIONS VS. THE CITY OF AMSTERDAM Figure 11: Additional Locations in The Netherlands THE FOCUS ON ENERGY EFFICIENCY GROWING INTEREST FROM ASIA CONSOLIDATION & EXPANSION DATA PROTECTION & EU REGULATIONS IMPLICATIONS AND OUTLOOK 20 IMPLICATIONS OUTLOOK TERMINOLOGY 21 8 TAXONOMY 22 MTDCS RETAIL COLOCATION WHOLESALE DATACENTER INTERCONNECTION MANAGED HOSTING INDEX OF COMPANIES 24 VII