The battle for European data centre supremacy

Lawrence Jones

Friday 12 June 2015

As US data centre giant Equinix announces its acquisition of UK-based Telecity, we look at what’s powering the growth in the data centre market, and where things might move in the future.

In the early days of the computer, whole rooms were needed to house the massive mechanical machines processing information. Today’s networked world demands something altogether larger, like Digital Reality’s Lakeside Technology Centre in Chicago. At over 1 million square feet it’s the world’s biggest data centre. Big data is big business – with the market worth around $150bn (€137bn) this year – and is forecast to grow.

Size isn’t everything, though; data needs to be secure. The Uptime Institute’s 4-tier classification system is the universally accepted measure of data centre stability and security across the world.

The US is a leader in data centre provision, but Europe isn’t far behind, with London named the second most secure place to host a data centre. In fact, six of the top-10 places were in Europe with the UK, France and Germany the leading European locations.

The market is mature with a number of large players increasingly aggressive in their growth strategies. In the data centre world things are getting interesting.

Business focus

Equinix – the largest US data centre by value – made headlines recently with its purchase of UK-based Telecity. The merger offers a substantial share premium and will grow Equinix’s presence in the UK. At £2.3 billion it’s a big sum, but it’s just one in a long-line of European acquisitions.

In March this year, Japan’s NTT acquired the largest German data centre provider e-shelter, offering them a greater foothold in the market. In fact, many industry experts are predicting a whole range of mergers and acquisitions across Europe as industry players do battle for market share.

Data centre operators may face some unlikely competition in the future for takeover targets. The market has piqued the interest of private equity groups keen to access a slice of the growing data centre market, which could lead to a whole raft of new takeovers and acquisitions.

Mega centre

As businesses seek to shore up their position in the market and grow many are investing in building new data centres, on a massive scale.

Portugal Telecom’s new data-centre recently opened and boast some quite amazing stats. Using the same amount of electricity as a small village the centre can store up 30 petabytes of data, and house up to 50,000 individual servers.

Purpose built, secure and offering huge amounts of storage space, they’re a way of strengthening market position and improving profitability we’re now seeing the growth of the mega data centre. As competition increases expect to see Europe feature more prominently as the home of such data centres.

In reality though, entering new markets – even for multi-billion dollar businesses – is a challenge many are reticent to takes. As a result, with barriers to entry so high, and potential profits so large we haven’t seen the end of market consolidation.

In fact, the rise in the mega centre could herald the age of the mega merger.

Building the next-gen data centre

Where traditional and web-scale apps co-exist