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4 Trends That Will Drive Hyperscale Data Center Demand In The Next Five Years

4 Trends That Will Drive Hyperscale Data Center Demand In The Next Five Years Image Credit: vladimircaribb/Bigstockphoto.com

It doesn’t take a rocket scientist to know the data center industry is hot and getting hotter by the day. Every report, every analyst projection, and anyone who’s been in the industry for any length of time agrees that despite the global economic impact of the COVID-19 pandemic - which prevented more than 60% of planned new facilities construction in 2020 - the data center industry is poised for significant and sustainable growth in the next four years.

While much of the industry focuses on traditional colocation facilities, enterprise and hyperscale data center growth is also expected to explode in the coming years, growing at an average of 21% per year through 2024. On the surface, it would seem that the surge in cloud adoption, increase in remote work and new technologies, and rising demand for data center facilities driving the growth in the colocation space would also be keys to hyperscale growth. But a deeper look reveals four emerging trends that are likely to be true drivers of hyperscale growth over the next five years.

Trend #1: Increase in client traffic

When data center insiders talk about “client traffic,” it’s not just individual users they’re describing. They’re also talking about various workloads and devices that place demand on networks too. And both groups will continue to grow at unprecedented rates, at least for a little while.

Recent research suggests that nearly two-thirds of the global population - approximately 5.3 billion people - will have internet access by 2023, compared with 3.9 billion just three years ago. The number of people connecting to the Internet will continue to drive demand for data-center-based compute and connectivity. Still, that growth will eventually reach an end since there’s a finite number of people around.

That’s not the case with devices, though. Analysts project that there will be more than 29 billion of these - wearables, smart appliances, and autonomous vehicles, among many others in the Internet of Things (IoT) category - that connect to networks in the next two years and machine-to-machine (M2M) traffic will comprise over half of all connections by 2023.

The massive growth in global internet traffic over the next 2-5 years will continue to be the primary catalyst for data center demand for the foreseeable future.

Trend #2: Application weight

Back in the good old days, internet destinations were lightweight and straightforward. You’d visit a website and be greeted with simple HTML code and both limited navigation and on-site capabilities.

Times certainly have changed, and today’s online destinations - apps like TikTok, Instagram, and even Apple Pay - are much more complex and offer a broader range of features and capabilities that require multiple servers to interact with one another behind the scenes to execute a simple request.

With more apps coming online at a breakneck pace and users raising their expectations of what the apps can do, the apps themselves will need to pack even more features and functionality. And as the software’s purpose becomes more complex and its functionality more extensive, so does the infrastructure required to support it.

Data centers will play an increasingly important role in providing the global connectivity required for international audiences to use their preferred apps and the compute and storage capacity to support the continued weight-gain these apps will inevitably experience as the expectations of their features and performance increase.

Trend #3: More time online

As apps and websites pack in more features and functionality, users will inevitably spend more time using them, even as the average number of apps a user downloads continues to decrease. Reports expect users to spend as much as 88% of their time on mobile platforms this year using their preferred apps.

The more time global users spend online, the more servers and low-latency connection options service providers will need. Hyperscale data centers will provide the scale and connectivity they’ll need to keep pace with the increased usage.

Trend #4: Service aggregation

Historically, companies procured IT components such as hardware, applications, and services from a single or handful of trusted sources commonly delivered on-premise to support their business operations. But today, enterprises have more choices in what, how, and where they buy their mission-critical infrastructure and solutions.

Transitioning that demand away from on-premise deployments and into centralized hyperscale data centers unburdens enterprises from having to buy, maintain, and upgrade IT hardware or even support software. Instead, all they have to do is deploy the applications they want in the cloud, and the rest is done for them, which significantly reduces both their CAPEX and OPEX and allows them to scale even further.

The expanded adoption of consumption-based business models and managed services will continue to drive enterprises toward cloud providers who can offer various service options and simplify hardware and software acquisition for mostly any business need. That surge in demand will push cloud providers to build out more data center space, furthering their expansion and sustaining the industry’s current projected growth rate.

Onward and upward

The data center industry will be a force to be reckoned with for years to come. The significant growth over the last decade has led many observers to wonder if and when the industry’s expansion will slow. But a deeper look into the real drivers of that growth in the first place suggests that the next five years (and likely more) will be especially kind to the hyperscale data center market as global internet use, application capabilities, and services consolidation continue their upward trajectories.

Author

Tim Hughes is the Director of Strategy and Development at Stack Infrastructure. He is an experienced data center and network infrastructure pro with a background in technical infrastructure strategy creation, data center and network site selection, commercial negotiations, property diligence and acquisition, strategic facility and network design, strategic supply chain management, vendor selection and management, financial analysis, project budget creation and management, program and project management, product management and critical facilities operations with a history of working in massive scale internet companies.

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