Malaysia, India next big data center hotspots
As costs of building and operating data centers in Asia increase in traditional hotspots such as Hong Kong, Singapore and Tokyo, other countries such as Malaysia and India have emerged as alternative sites for their improving infrastructure and lower costs.
Mayank Kapoor, industry analyst of ICT practice at Frost & Sullivan, said new contenders have arrived on the horizon to offer competition to current favorites such as Hong Kong and Singapore because of the rapid increase in costs in these markets.
Malaysia and India have been highlighted as the main contenders in the next wave of emerging hotspots, with their attractions including lower costs, strong growth in domestic demand, and an improving ICT infrastructure, Kapoor added.
Saravanan Krishnan, director of platforms and solutions business for Asia-Pacific at Hitachi Data Systems (HDS), added Malaysia's stock is rising because it has comparable infrastructure in its cities such as Kuala Lumpur, compared to Singapore and Hong Kong.
The Malaysian government has also been very supportive of welcoming business into the country, offering tax benefits for companies looking to set up operations there, Krishnan stated. Its focus on green initiatives is another benefit for datacenter operators keen on entering the market, he added.
India, too, has positioned itself as a direct challenger due to its large pool of skilled workers for the datacenter industry, as well as efforts to improve its infrastructure and reduce cost of business, the HDS executive noted.
Checklist when picking site
Chin Jun-Fwu, research manager of virtualization and data center at IDC Asia-Pacific, pointed out enterprises should consider datacenter costs in terms of building and operating the facility. With this in mind, it is easier to weigh the pros and cons of choosing one's datacenter site, Chin added.
Vietnam, for example, is one Asian market companies can quite easily obtain a good piece of land to build their data centers. It also has one of the lowest rental costs in the region, he told ZDNet Asia in a phone interview.
However, bandwidth fees--which would fall under operating costs--is a "deal-breaker" for many companies as it is among the highest and, on average, about six times the price listed by more matured markets, the analyst noted.
Kris Kumar, senior vice president and regional head of Asia-Pacific at Digital Realty Trust, said beyond the costs of land and operations, other factors also come into play when picking one's datacenter site. These include having a politically and geographically stable environment, as well as strong, robust bandwidth connectivity to connect with other data centers, Kumar pointed out.
These are reasons why places such as Singapore and Hong Kong, despite being land-scarce destinations with high rentals and operating costs, continue to attract companies to base their datacenter facilities there, he said.
Conversely, places such as China, which has the potential to be a strong datacenter market with its large human capital and cheap, available land, remain secondary sites due to uncertain regulatory regimes, he explained.
Kumar's views were echoed by Mark Quigley, director of international operations at Softlayer Technologies, a cloud computing and managed hosting service provider which launched its Singapore data center last September.
He said the company's rationale for situating its data center in the city-state was "simple": proximity to customers. This aspect is crucial to driving innovation and improving end-user experience, Quigley explained.
Singapore is also an economic and technology hub, home to 10 percent of Forbes Global 500 companies, and a business-friendly environment that offers "favorable" tax laws, he stated.
HDS' Krishnan summed it up, saying: "These countries, with their established social infrastructure, strong ICT infrastructure, and existing communities of local, regional, and international businesses, have managed to couple these benefits with strong government support and incentives, creating a winning recipe for success."