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Low oil prices to fuel datacentre expansions in 2016, claims Canalys

Canalys claims access to cheaper energy will make it easier for datacentre operators to respond to growing demand for cloud

Datacentre operators look set to reap the benefits of the ongoing decline in oil prices, with Canalys claiming the oversupply of this commodity will pave the way for providers to invest in larger facilities.

The market watcher claims the datacentre market is set to grow by around 8% this year, as operators look to capitalise on the growing availability of cheaper energy to increase the capacity of their facilities.

Oil prices have declined by more than 70% since mid-2014, and will remain low as production ramps up across the US and Middle East,” said Canalys in a statement.

“Datacentres, with their monolithic energy consumption, will benefit from cheaper electricity as wholesale gas prices decline. Investment will focus on larger facilities, as energy becomes less of a constraint on operating costs.”

The prediction is sure to raise eyebrows among environmentalists, such as Greenpeace, that have been lobbying the members of the cloud and datacentre market to reduce their reliance on fossil fuels.

This is on the back of concerns about how the adoption of cloud- and web-based services may prompt datacentre operators to seek out cheaper forms of energy for their facilities to meet end user demand.

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Demand for datacentre hardware to grow

Falling oil prices, coupled with the Safe Harbour-induced demand from US firms for European facilities, should ensure the datacentre hardware market also enjoys solid growth throughout the year.

As such, Canalys predicts demand for industry-standard servers, network security and virtualisation tools will increase this year, as users look to refresh their facilities in anticipation for big data, internet of things (IoT) and more analytics-led projects.

Datacentres, with their monolithic energy consumption, will benefit from cheaper electricity as wholesale gas prices decline. Investment will focus on larger facilities, as energy becomes less of a constraint on operating costs
Canalys

This, the analyst claimed, should result in the datacentre infrastructure market growing by 4.4% in 2016 to $135bn in market value, but growth in the actual number of units shipped is expected to be much higher, as commoditisation prompts the average selling price of datacentre kit to drop.

Ben Stanton, research analyst at Canalys, said all of this should prompt datacentre operators to rethink how their facilities are kitted out.

Software-defined environments are unlocking more value in hardware than ever before. Customers are being forced to rethink their IT strategies with features such as agile on-demand and as-a-service offerings, faster application deployment and greater infrastructure flexibility and scalability,” he said.

“Additionally, sales processes are becoming increasingly applications-led, which lends itself nicely to digital transformation projects involving big data, analytics and IoT.” 

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