Digital Realty Trust eyes growth in four Asian markets

SINGAPORE--Despite its "cautiously aggressive" stance, Digital Realty Trust has heeded its existing customer base's request to expand beyond its stronghold in U.S. and Europe into Asia-Pacific and is now working from scratch to build its business in four markets in the region, said company executives.

Jim Smith, chief technology officer (CTO) of the U.S.-based Digital Realty Trust, said the company had been thinking of entering the region earlier in 2008, but the recession in the latter half of that year proved to be a "distraction". Since then, many of its existing customers have been after the datacenter operator to branch out into this part of the world, he noted.

The CTO, who was in town for a conference, told ZDNet Asia during an interview Thursday that as Asia-Pacific has not experienced the "datacenter boom-and-bust" cycle that afflicted the U.S. during the dotcom years at the turn of the century, there are no legacy IT systems to contend with.

Furthermore, there is pent-up demand for more datacenter space and capabilities as companies in this region got out of the 2009 recession pretty quickly and are growing fast, he said. Increasing interest in cloud computing and virtualization technologies by businesses here are the other demand drivers mentioned by the executive.

To address the demand, Smith named four countries, namely Singapore, Australia, Hong Kong and India, which the company will be looking to work out of. Elaborating, he noted that Digital Realty Trust focuses on financial centers globally and has a presence in cities such as London and Paris. The Asian markets that the company is targeting are a natural extension of its business strategy, he said.

The CTO also noted that the design template for the company's turnkey data centers, which are dedicated datacenter facilities made available for leasing to customers, will be replicated across multiple cities because these have been architected to suit a wide range of needs.

The level of similarity for these datacenter configurations goes up to as high as 90 to 95 percent, with the remaining 5 percent for customers to customize the systems for their needs, said Smith.

When quizzed about how the datacenter operator plans to overcome the challenges of land scarcity and high power costs, Digital Realty Trust's regional head of Asia-Pacific and vice president of corporate development, Kris Kumar, who was sitting in the same interview, said these challenges are likely to surface in other markets, too.

"As long as we bring our price down and do better than what companies would do on their own otherwise, then we are winning [them over]," he pointed.

Chiming in, Smith said getting access to electricity in London is a "nightmare". Comparatively, Singapore, which he described as a new urban environment, is a breeze to do business in due to the high level of transparency and accountability during the bidding process for the allotment of power from the utilities companies. 

He also noted that local power utility companies such as Singapore Power and Tuas Power now understand that provisioning for datacenter operations has to be factored into their equations in order to boost businesses based out of Singapore. This was not the case a few years back, the CTO observed.

Singapore has been focusing its efforts to become an attractive datacenter destination. Earlier in June, local ICT regulator Infocomm Development Authority of Singapore (IDA) announced new initiatives to push risk-averse data centers to be greener. Under the national green datacenter strategy, one of the initiatives includes creating an isolated environment for businesses to testbed energy-efficient measures for existing data centers.

The company will not venture into the region's emerging markets such as Indonesia and Vietnam any time soon, though. According to Kumar, the company has "more than enough to chew on" for the next two years just to get its business off the ground in the four targeted markets.

Describing Digital Realty Trust as "cautiously aggressive", the regional head said he would be more confident of the level of investment that the company will put into the region 12 months on.

However, Kumar pointed out that "demand far outstrips the supply" in this region, and the company will be looking to scale out its operations in the near future to meet customers' needs.