No region will claim 'world datacenter hub' title

Internet traffic, commerce and natural geographical boundaries will determine where companies host data centers, which means no region will singularly dominate this space, says observer.

There will be no single geographic region that will be able to boast that it is the top destination for companies to set up their data centers as the site depends on where their customers are and the flow of commerce, according to one market observer.

Asia-Pacific has been seeing much datacenter activities in recent times, with Internet companies such as Amazon Web Services and Google having established or in the midst of setting up data centers in the region. Managed hosting service provider Softlayer and data center hosting company Digital Realty Trust, have also set up their data center operations in Singapore in the past couple of years.

Among countries in the region, Singapore, for one, has also expressed its intentions to be a datacenter hotspot by introducing pro-business infrastructure and green incentives to attract companies to its shore.

Commenting on the increase in activities in Asia, Kris Kumar, regional head of Asia-Pacific at Digital Realty Trust, said the growing Internet population here has led to increased information flow that, in turn, means more data centers need to be built here to support the growth.

However, the executive said in his e-mail that no single region can be designated as the "world datacenter hub" as companies will need to "follow natural geographical boundaries, people and commerce".

"Commerce is happening around the world, people everywhere are consuming data, and data sovereignty or data jurisdiction issues need to be considered. For example, sensitive data such as those in the financial sector are restricted from leaving national or regional borders," Kumar explained.

With this in mind, he noted that it would be "counterproductive" to have a single datacenter hub. Instead, companies should look at building an "ecosystem of datacenter hubs" to address their global business demands, he suggested.

One such business demand could be stricter data regulations being introduced by governments. Praveen Sengar, principal research analyst for enterprise software at Gartner, told ZDNet Asia in an earlier interview that there was a building momentum for stricter data privacy regulations following global events such as Arab Spring.

"Restrictions could be in requiring social networking sites and Web companies to host their data centers locally, as well as having a tighter compliance environment for shared data," he stated.

In a separate report, Gartner had forecasted that datacenter hardware expenditure will reach US$98.9 billion this year, with storage as the main driver of growth. This represents an increase of 12.7 percent over 2010's US$87.8 billion, it stated.

Jon Hardcastle, research director at Gartner, noted in the same report that growth in emerging markets such as Brazil, Russia, India and China will help make up for weaker demand in markets such as Japan and Western Europe. He added that almost half of this growth in spending will be from the storage market.