Brexit might not be all its bigged up to be – Equinix

With Brexit chat flying back and forth across the English Channel, London might be a dirty word, but that hasn’t stopped it from charging ahead of interconnection trends.

Interconnection bandwidth, the movement of data without traversing the public internet, is an aspect of the connectivity industry which has been growing steadily over the last few years without attracting headlines. As more organizations progress in their digital transformation journeys, it could be used a good measure of economic digital activity in a region. According to Equinix, there is little evidence Brexit is having any material impact on business just yet.

Quoting its second annual Global Interconnection Index (GXI), interconnection bandwidth is forecasted to grow to 8,200 Terabits per second (Tbps) of capacity by 2021, the equivalent of 33 Zettabytes (ZB) of data exchange per year, which is projected to be ten times the capacity of internet traffic. This represents a five-year compound annual growth rate (CAGR) of 48%, compared to 26% CAGR of global IP Traffic. Despite many fearing Brexit would isolate the UK from Europe, if the flow of information is taken as one of the measures of economic productivity, things don’t look too bad right now.

Across Europe, London, Amsterdam, Frankfurt and Paris are the fastest growing markets for interconnection bandwidth, with only Amsterdam (57% CAGR) and Frankfurt (58% CAGR) outperforming London (52% CAGR) for projected growth. And while London sits in third for projected growth, it is still the most important market for Equinix on the continent accounting for more than 35% of Europe’s private data exchange growth. It is simply that much bigger than any other region.

“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,” said Russell Poole, MD of Equinix’s UK business. “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.”

The growth of the interconnection bandwidth is driven by digital transformation. As more business critical processes become digitized, the need to ensure real-time interactions between people, things, locations, clouds and data, in a secure fashion becomes more important. Using private data traffic exchanges to bypass the public internet and mitigate against digital threats, reducing the number of vulnerability points, is becoming increasingly popular. Despite Brexit looming on the horizon, the GXI claims 64% of decision makers believe the UK is still the best place in Europe to Interconnect with partners, customers, supply chain and cloud service providers, due to the growing data centre industry.

While these statistics are encouraging, at least for those who live in the UK, it ultimately means very little. No-one really knows what the impact of Brexit will actually be until we’ve actually left the union. That said, it is nice to see not everyone is jumping on the fear-mongering band wagon.

Data Transfer Project could cut AWS cloud dominance – Equinix

Amazon’s cloud business, AWS, might be romping ahead of the pretenders in the market share rankings, but the progressing Data Transfer Project could see this lead eroded and the rise of more niche players.

In most sub-sectors of industry, the first to market usually commands a significant market share once the segment has been normalised. The vendor has an established business model, brand and customer base, however this dominance is usually eroded through competition over time. AWS’ position is standing the test of time, though Sachin Sony of Equinix believes the Data Transfer Project could lead to the end of this strangle hold.

“Interoperability between cloud environment will not only be beneficial to customers, but will open up opportunities for more niche providers to establish market share,” said Sony.

“Customers are now dictating the terms, changing the status quo. This is largely driven by the exponential growth in data, especially with IoT and big data, with customers now becoming the dictators on what cloud environment should look like.”

The Data Transfer Project is a collaboration between various organizations to build a common framework with open-source code that can connect any two online service providers, enabling a seamless, direct, user initiated portability of data between the two platforms. In short, it creates interoperability between the provider’s cloud environments to simplify the migration of data between one service and another.

Right now, migration is difficult, which has led to the dominance of the major cloud players. Companies like AWS secure a contract with an organization, but as migration is so difficult, customers are compelled to scale up with the same service. Customer retention becomes simpler, as the options to move are time consuming and expensive, meaning the larger organizations can spend more time securing more customers, who will grow, repeating the cycle.

While it does not sound like the end of the world, because of the difficulties in migrating data, niche service providers struggle to establish themselves. Sony suggested improving interoperability will allow for more resilient multi-cloud environments, where the hyperscale players can be used for more generic activities, and the niche players for more tailored and mission critical business processes. It might also encourage more organizations to transition more data to the cloud.

“When enterprises started moving to the cloud it was a great way to cut costs,” said Sony. “But companies did not think this through.

“When you go to a cloud based environment, you are making yourself captive of that vendor. It’s a very risky business model as it creates a single point of failure. When there have been outages, or the business expanded into new areas where that provider isn’t, complications arise. These organizations need diversification in their cloud environments. They need interoperability.”

Of course, whenever the customer starts dictating terms the big vendors tend to resist, and AWS is not an active contributor to the project at the moment. Why would it want to contribute to something which would destroy its dominant position in the industry? However, Sony thinks it is only a matter of time.

Interoperability is an attractive prospect for the customer as it offers security, resiliency and agility. Cutting costs is not the sole objective of the cloud-orientated business model anymore, therefore customers will look elsewhere at the expense of a couple of dollars should a provider not offer interoperability. It’s only a matter of time before AWS is forced into line.

This is not to say this project will cost AWS money. In theory, it should encourage more organizations to migrate data and more mission critical processes to the cloud, resulting in more business. But, this will be more business for everyone. Interoperability takes cloud from a specialist service to more of a commodity. The specialism will be creating unique and tailored environments, a service which will be offered by the smaller emerging players.

This project and the trend of interoperability will not cost AWS money, but it might cost it market share.