Hong Kong to stay as key Asia Pacific data centre market

frost and sullivanLimited land availability and high real estate prices are unlikely to make Hong Kong lose its status as a key data centre market in Asia Pacific, according to Frost & Sullivan.

The limitations are countered by the Hong Kong Government’s continuous support for the sector.

“Hong Kong’s strong political connection to Mainland China allows it to act as a gateway for global companies that seek to tap into opportunities in China’s market,” said Danni Xu, Research Analyst, ICT Practice, Asia Pacific at Frost & Sullivan. “Moreover, Hong Kong’s business-friendly and free-trade environment has drawn a number of multinational corporations (MNCs) to set up their regional headquarters in the country. This has brought in numerous investments and job opportunities, and created demand for data center services.”

She noted that the Hong Kong data centre market is expected to grow at a CAGR of 15.3 percent to reach US$802.6 million in 2019.

However, she added that service providers may choose to locate a part of their facilities outside of Hong Kong to reduce their capital and operating expenditure and tap into the increasingly demand of business continuity planning and disaster recovery service.

Cloud computing emerged as the fastest-growing segment of the data centre market over the last three years and helped to add value to service providers’ traditional portfolios. This created new revenue streams and led to strong growth in revenue.

Frost & Sullivan estimates that each dollar spent on cloud services drives an additional spending of 20–25 cents on other services, such as connectivity services, hosting services, and information security services.

Xu said that the popularisation of cloud computing has led to the emergence of cloud-centric data centres, such as CITIC Telecom CPC’s cloud centres and Pacnet’s HKCloudSpace2 data centre, which are built with multi-tenancy and pay-per-use models as a key theme.

“In future, this multi-delivery model environment is expected to give rise to IT-as-a-Service, where IT budgets would cease to exist at an organisation level and instead, become embedded into business units’ budgets,” she added.

She also said that consequently, IT departments would shrink and Chief Information Officers are likely to evolve into internal service providers, whose roles revolve around business innovation, rather than technology innovation.

A majority of MNCs headquartered in Hong Kong foresee growing demand in most parts of the Asia-Pacific region. Hence, they are actively expanding their footprint and shifting their business focus beyond the country. As a consequence, besides strengthening the local business, data centre and cloud computing service providers are also looking to set up overseas facilities, to tap regional businesses — not only to develop new customers, but also to facilitate their current customers’ expansion pace, she added.


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