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Datacentre operators should evaluate emerging markets before jumping in

Indian telco CEO claims datacentre operators are risking business failure by not investing time in getting to know the nuances of emerging markets before expanding into them

Colocation providers wanting to cash in on growing demand for datacentre capacity in emerging markets should take time to understand the nuanced demands of users in those regions to be successful.

That’s according to William Barney, CEO of Indian telco Reliance Communications, who talked up the untapped growth potential for datacentre operators in the “emerging market corridor” during a keynote speech at the 2016 Datacloud Europe conference in Monaco.

“Most of your internet datacentres are located in Central and Western Europe, North America and North Asia. If you look at the emerging market corridor, which goes through China, Eastern Europe and Africa, there are no datacentres and no cloud capabilities,” he said.

“If you look at the past two decades, most of the growth in GDP came from Western Europe, North America and Japan. If you look at the past five years, China and the emerging markets have been driving growth and the economy, and they will continue to grow in the next five years.”

Despite the scarcity of datacentres in emerging markets, internet use is growing in the corridor as the average selling price of web-connected devices falls, he claimed.

“Some 75% of the world’s population is in this corridor, and 1,400% of the internet growth is coming from there. Four billion people in that corridor do not have internet access, but they will.”

Read more about datacentre trends in global markets

As access to the internet opens up in these regions, the demand for locally hosted content will grow, and colocation providers could clean up. However, Barney cautioned, success is not guaranteed.

“In the emerging markets today, almost 50% of the datacentre businesses have gone bankrupt or out of business, and they went out of business for a reason.

“In some places, like China and India, the reality is they didn’t really look at the model that works. And to say the model that worked in North America, for example, can apply to the emerging markets is false.

“In the emerging markets, almost 50% of the datacentre businesses have gone bankrupt or out of business, and they went out of business [because] they didn’t really look at the model that works”
William Barney, Reliance Communications

“You have to look at the specific market, the regulations, and try to understand how you can make money in those markets,” he added.

Colocation giant Equinix operates several datacentres in Shanghai, China. Speaking to Computer Weekly, Eric Schwartz, the company’s president for Europe, the Middle East and Africa, backed Barney’s view.

“We’ve been very thoughtful of how we operate in China to make sure we’re consistent on policies, regulations and laws, and we haven’t just gone in there thinking ‘this worked in Los Angeles, it’ll work here too’,” he said.

“It is a very different political, regulatory and economic environment, and you have to respect that. Having a willingness and ability to operate in that way makes a tremendous difference.”

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