Data center site selection has been on a wild ride for the past several years. The only consistency is that the appetite for data center capacity has been ravenous. The ecosystem of data center architecture and the related real estate continue to adapt to meet the ever-changing technology needed from Industry 4.0, the Internet of Things, high performance computing, 5G telecom, self-driving automobile navigation and more.

Substantial computing power is being demanded by the consumer yet some of this capacity is being pushed to the “edge” to where the consumer needs it.  Each year data center real estate experts attempt to project what trends we will see in 2019 based upon what happened in prior years.

The interesting trend in mission critical real estate for 2019 is that two diverging initiatives are intertwined to meet consumer demand. Hyperscale data centers will increase in needed megawatts of power in single campuses totaling hundreds of thousands of square feet of raised-floor environment. Yet on a much smaller capacity level — but just as critical — edge data centers need to meet the challenges of delivering an enhanced user-experience with low latency. These edge facilities can have dense power needs with many being sized less than a few hundred square feet.

Hyperscale data center capacity to be outsourced; 100 megawatt deal is near

In 2018 one of the notable trends in data center real estate was the major initiative by the hyperscale data center industry to use third-party colocation operators. These hyperscale users — which include the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) but also IBM, Microsoft, Oracle and Alibaba — started leasing wholesale colocation space in increments of 5 megawatts (MWs) or less last year.  By the end of 2018, according to research from North American Data Centers, there were 12 wholesale contracts exceeding 10 megawatts or more, with one contract exceeding 70 MWs. To provide an idea of how large 70 MWs of power is, this power concentrated in one data center campus equates to the power needed for over 55,000 homes.

The number of 2018 deals more than doubled 2017’s total. The projections for FAANG demand for 2019 will be “more of the same” and should easily double 2018’s record total. The average size is expected to increase to the point that a 100 MW contract should not be a surprise. What is important is that these goliaths are enjoying the symbiotic relationship they are having with these wholesale colocation partners. A few wholesale colocation operators, such as CyrusOne, CloudHQ and QTS, have focused their business plans to meet this demand. The expectation in 2019 will include other competitors’ entering the ring to keep up with demand.

Edge computing is in demand but what is the preferred technology?

Edge computing allows the data center network to be close to the consumer. In data center site selection, the Uptime Institute compared this technology and the related demand for it to other data center sectors in a recent report: “The data generated is driving demand for data center of all types: those nearby (‘local edge’ or ‘edge’) for first-line processing, analysis, and routing; those within a local area (‘near’ or ‘regional’ edge) to connect, integrate, and re-route; and those far away — such as economical hyperscale facilities, (‘core’) for further processing, analysis, and archiving.”

While data center providers recognize the importance of spreading data center capacity to the edge, the methods to date seem to be the “Wild West” in determining the most effective strategies to reduce latency yet escalate the rapid deployment needed. Some concepts being used include:

  • Modular container-sized turnkey data centers essentially dropped-shipped and installed at a location
  • Micro data centers that offer high-performance computing of up to 100 KW/rack, providing an easy deployment that can be affixed to cell towers and rooftops
  • Small data centers housed in office space storage closets such as Amazon’s initiative to house them in Whole Foods locations

The landscape for edge computing will continue to evolve in 2019 and its importance will also increase.

Conclusions

Data center solutions are coming in various forms, so it is interesting that in 2019, we have the “Big and the Small” being interlinked as important answers and an interesting inflection point in the data center world.

 

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