However, “massive-scale cloud providers” like Amazon Web Services, Microsoft and Google are opting to build their own data centres here – a trend not seen elsewhere in the Asia-Pacific region, Structure Research says.

SINGAPORE: The local colocated, or outsourced, data centre market generated an estimated US$934 million (S$1.3 billion) this year, according to a recent study released by Structure Research.

The Canada-based research firm said in its study that this figure is projected to grow 13 per cent in 2018, and the market will grow at 12 per cent compound annual growth rate to hit US$1.5 billion (S$2 billion) by 2021.

There are 46 colocation providers in Singapore, including providers with their own colocation data centres as well as sizeable resellers, and together they sell colocation space in 58 operational data centres here today, it added.

A colocated data centre is generally a facility that allows businesses to rent space to install their servers and other computing hardware, while the landlord provides for the bandwidth, power, cooling and physical security. Third-party data centres make up about 30 per cent of the overall market landscape, while proprietary ones constitute the rest.

Singtel and Equinix are the top two service providers in Singapore with a combined market share of 46 per cent from a revenue generation standpoint, while other top providers include Digital Realty Trust, ST Telemedia and Keppel Data Centres, the study said.

Structure Research’s research director Jabez Tan told Channel NewsAsia over email that the leader board measures the critical IT load power capacity that is currently operational from these colocation providers here. “This leaderboard is not a measure of power energy usage but a measure of power capacity that they are able to provide to their end-users,” he explained.

STANDING APART

That said, while the outsourced data centre market is on the rise, Mr Tan pointed out that “massive-scale cloud providers” like Amazon Web Services, Microsoft and Google are opting to build their own data centres here  – an anomaly in the Asia-Pacific region.

They are doing so to augment their strategy of leasing capacity within colocation data centres, he added.

Asked why this is so, Mr Tan said: “Singapore represents a strategic Asia-Pacific hub for the cloud providers where it makes sense to build their own data centres given the low risk and long-term viability of the country as a financial and global hub.

“Singapore also stands out given the proactive, friendly and highly efficient business environment compared to other APAC markets, including the ability to relatively easily obtain land to build from the Singapore Government,” he added.

A separate report by Cushman & Wakefield in October found that Singapore continues to be the region’s top location for operating data centres, ahead of South Korea, Hong Kong and Japan. The index looks at factors such as energy, the ease of doing business, political stability, natural disaster and energy stability, as well as Internet bandwidth.

Mr Tan added that because of this trend among the bigger cloud computing players, demand by them for wholesale colocation capacity in Singapore is “projected to slow down moderately in the near term”.

That said, given the pace of growth for public cloud computing, which stands at more than 45 per cent annually, the “medium- and long-term fundamentals remain intact for this particular vertical to contribute meaningfully to the growth of the Singapore colocation market”, the research director said.