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Nordic region competes for datacentre dominance

The Nordic region is an attractive region for datacentres as demand for cloud services in the area grows

Nordic countries’ European data traffic hub ambitions have been beefed up by a string of investments.

In January 2017, Facebook announced it is building a third European datacentre in Denmark, and now Amazon Web Services (AWS) has followed suite with plans to establish its first Nordic data facilities in Sweden. 

AWS cited the proximity of internet exchange points, access to technical talent and renewable energy sources as the key factors behind its choice of location. The three data hubs, slated to open in 2018, will bring AWS’ computing power closer to its customers in the Nordic region.

“We also looked at how much geographic area we can cover and have the right kind of low latency, because most applications perform best with the lowest possible response times,”  Darren Mowry, head of AWS Nordics, told Computer Weekly.

“In the Nordics, infrastructure around the Stockholm area provides low latency for virtually all of the capital cities across the region.”

The company’s three ‘availability zones’ (AZs) in Sweden will be located in Eskilstuna, Katrineholm and Västerås. The company doesn’t give out details about its infrastructure, but says a typical AZ hosts at least one datacentre and between 50,000 and 80,000 servers.

Tomas Sokolnicki, IT head at Data Centres by Sweden, which assisted AWS with its Swedish plan, is confident the new investment benefits the whole Nordic region.

“The Nordics are still a very small market in the global sense, so the more investment like this we get to the region the more it will catalyse the entire industry here and help other foreign investors look to place datacentres here,” he said.

Read more about Nordic datacenters

Many have already done that, with the most prominent names among them including Google in Finland, Facebook in Denmark and Sweden and Apple, which is finalising its datacentre construction in Denmark. Furthermore, Norway is home to Europe’s largest colocation centre with clients such as IBM.

The odd one out is Iceland, which accounts for only 3.5% of the Nordic datacentre market, according to BroadGroup. But a recent study by Citihub Consulting believes the island nation is well positioned to become a major hosting centre for the financial services sector thanks to its abundance of cheap renewable energy, low hosting costs and high data security rating.

Cloud boosted growth

Currently the Nordic market covers close to 10% of datacentre square meters in Western Europe, and this is on the rise. Datacentre consultancy BroadGroup saw an overall increase of 34% in datacentre square meters in the Nordics between 2015 and 2016, with Sweden boasting the largest market in installed capacity and Norway close to behind.

“The way in which Norway, Sweden and soon Denmark have reduced taxes on energy, as well as providing carbon neutral and renewable energy resources to support datacentres, represents a highly competitive offering,” said Philip Low, chairman of BroadGroup. “Globally, enterprises are recognising the Nordic opportunity and the region will undoubtedly benefit from further web-scale investment.”

Low notes one drawback of the Nordics’ remote location can be connectivity, but he believes the issue is being addressed.

“Finland recently invested in the Cinia managed cable which runs into Germany,” said Low. “Norway is assessing the investment needed in subsea cable to provide it with greater control over traffic and pricing, but also new bandwidth resources.”

The investment in the Nordic region’s data prowess is going on strong. Technavio forecasts the datacentre construction market in the Nordics will grow at a compound annual growth rate of 22% during 2016-2020, compared with 12% globally. The report cites demand for cloud-based services and colocation services as the key drivers behind this.

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