Despite Political Uncertainty, London’s Digital Growth Shows No Signs of Slowing as Capital Accounts For Over 35% of Interconnection Bandwidth Growth in Europe
REDWOOD CITY, Calif. – September 18, 2018 – Digital transformation is accelerating for every company in every industry, everywhere around the world. As a part of this necessary transition, people, software and machines are creating and consuming data faster and in more distributed locations than ever before, creating dissonance and driving businesses to private and direct Interconnection to solve their complex integration challenges.
According to the second annual Global Interconnection Index (the “GXI”), a market study published by Equinix that analyses traffic exchange globally, Interconnection, or direct and private traffic exchange between key business partners, is becoming the defacto method for companies to operate in today’s digital world. Interconnection Bandwidth provisioned for this purpose is forecasted to grow by 2021 to 8,200+ Terabits per second (Tbps) of capacity, or the equivalent of 33 Zettabytes (ZB) of data exchange per year, a dramatic increase over the previous year’s projection and ten times the projected capacity of internet traffic1. This represents a significant five-year compound annual growth rate (CAGR) of 48%, almost double the expected 26% CAGR of global IP Traffic.
The second annual GXI reveals that Europe is projected to lose its second space spot behind America to Asia. Although Europe’s Interconnection Bandwidth is still growing fast (48% CAGR) and expected to contribute to 23% of Interconnection Bandwidth globally by 2021, Asia is not only projected to overtake Europe, contributing to 27% of global Interconnection Bandwidth, but will grow faster at 51% CAGR. America still holds the top spot, and is projected to have the largest capacity for Interconnection Bandwidth globally, contributing to more than 40% of global Interconnection Bandwidth by 2021. Latin America is on track to be the fastest growing market, with a CAGR of 59%.
Across Europe, Interconnection Bandwidth in London, Frankfurt, Amsterdam and Paris are expected to outgrow other European markets by at least 10% CAGR. Frankfurt and Amsterdam are both projected to outpace London in terms of growth. London’s Interconnection Bandwidth will grow by 52% CAGR, Frankfurt by 58% and Amsterdam by 57%. The wholesale and retail trade sectors are expected to have the fastest growing Interconnection Bandwidth in Europe (75% CAGR). The securities and trading sectors, along with healthcare and life sciences, will have the joint second fastest growing (69% CAGR). Both the business and professional services industries, and banking and insurance industries, are projected to grow rapidly, with 65% and 66% CAGR of Interconnection Bandwidth respectively.
“Significant macro, technology and regulatory trends are converging to form an unprecedented era of complexity and risk and forcing the integration of physical and digital worlds,” said Sara Baack, Chief Marketing Officer for Equinix, Inc. “The second volume of the Global Interconnection Index has found that companies are solving their increasing digital requirements by directly connecting to key business partners through Interconnection, as traditional forms of connectivity do not meet the demanding requirements of today’s businesses.”
“Despite Brexit and political uncertainty in the UK, the GXI reveals that London is projected to show strong growth, accounting for more than 35% of Europe’s Interconnection Bandwidth growth,” states Russell Poole, Managing Director UK at Equinix, Inc. “London’s digital acceleration shows that post-Brexit, Interconnection Bandwidth continues to be driven by the secular growth of global data traffic and the massive shift in IT to support this data explosion. Equinix’s 12 data centres across the UK and the recent expansion of Equinix’s LD4 data centre in Slough, is an example of the continued investment and growth in London’s digital sector.”
Some of the key macroeconomic, technology and regulatory trends that have driven Interconnection growth in the past year and will impact its future growth include:
In a separate independent study commissioned by Equinix of 133 senior IT professionals across the UK, over three quarters (77%) of senior IT professionals believe that as the public internet becomes more saturated, Interconnection is key to digital business success. Despite Brexit, 64% of the senior IT decision-makers surveyed think that due to the flourishing data centre industry in the UK, the UK is still the best place in Europe to Interconnect with partners, customers, supply chain and cloud service providers.
To capture digital value, companies will need to support real-time interactions by more strategically interconnecting the workflows across people, things, locations, cloud and data. The second volume of the GXI identifies four classes of Interconnection use cases5 along with an IT maturity model. Adopted in combination, these use cases create a digital-ready infrastructure for today’s businesses:
“The explosive global demand for streaming video content, has meant that Content Delivery Management (CDM) companies have had to turn to cloud in order to survive” said Ben Foakes, Managing Director at BASE Media Cloud. “And as cloud becomes a vital component to the media and entertainment industry, so does Interconnection. BASE Media Cloud and its customers will only be able to meet this rapidly increasing demand for video data by leveraging Interconnection. This year’s GXI highlights the importance of our relationship with Equinix, as by 2021 Interconnection Bandwidth among CDM companies is set to increase at a 41% CAGR.”
Industry Perspectives on the Global Interconnection Index
“As enterprises chart their paths to greater digitisation, they seek pathways that avoid the turbulence generated by the growing complexity of integrating various digital services. New architectures anchored by Interconnection smooth this complexity and, increasingly, enterprises are finding that they also yield improvements in security, performance and capacity. Equinix’s Global Interconnection Index provides useful insight into these digital trends including why businesses are directly connecting with strategic partners to build their digital business ecosystems.”
“The majority of FX Spot trading is already electronic, and we see the ratio of digital business increasing at pace across other asset classes. Maintaining low latency is critical to our digital business, with fast, reliable networks provided by Interconnection forming a core part of that mission."
About The Global Interconnection Index
The Global Interconnection Index, published annually by Equinix, delivers insights that drive digital business advantage by tracking, measuring and forecasting growth in Interconnection Bandwidth—the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points. As crucial as Interconnection is to how digital business is conducted, it has never been quantified. The Global Interconnection Index changes this with industry-first projections of how Interconnection growth and access will unfold through 2021. The report serves as a market baseline that analyses the deployment profile of thousands of ecosystem participants using carrier-neutral colocation data center providers globally. This data was combined with local and regional market data (including macroeconomic trends, market demographics and industry concentrations), and with key demand drivers of digital business, to form a weighted demand multiplier to assist in predicting growth to factor the impact of digital business transformation. A detailed methodology description is included in the Global Interconnection Index.
About the independent study
Equinix commissioned a separate independent survey, which surveyed 133 senior IT decision-makers across the UK. The survey was conducted via online interviews between 20th of August and 13th of September. Fieldwork was undertaken between 20th of August and 13th September 2018.
1. Cisco – “Visual Networking Index”, 2017
2. IDC FutureScape: Worldwide IT Industry 2018
3. Cybersecurity regained: preparing to face cyber attacks, EY, 2017
4. Capitalizing on Your Business Ecosystems Economy: Gartner, 2017
5. The four classes of Interconnection use cases were developed by analyzing more than 1,800 industry implementations worldwide, are documented in the IOA® Knowledge Base, and have been validated by IT practitioners and industry experts.
Equinix, Inc. (Nasdaq: EQIX) connects the world’s leading businesses to their customers, employees and partners inside the most-interconnected data centers. In 52 markets worldwide, Equinix is where companies come together to realise new opportunities and accelerate their business, IT and cloud strategies. http://www.equinix.com/
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX data centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
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