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Private Connectivity Between Businesses to Grow to Nearly 10x the Internet, According to 2nd Annual Global Interconnection Index

Sydney’s Interconnection Bandwidth expected to more than quadruple by 2021, contributing to Asia-Pacific’s rapid growth rate surpassing United States and Europe

Sep 19, 2018

SYDNEY, Australia – September 19, 2018 – Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data centre company, today published the second annual Global Interconnection Index (the “GXI”), a market study that analyses traffic exchange globally. The study reveals that global Interconnection Bandwidth 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 compound annual growth rate (CAGR) of 48% by 2021, almost double the expected 26% CAGR of global IP traffic.

 

Asia-Pacific’s Interconnection Bandwidth is expected to grow at a 51% CAGR to 2,200+ Tbps by 2021, growing much faster than the United States and Europe. Sydney continues to remain as one of the top metros in the region, with Interconnection Bandwidth capacity expected to more than quadruple by 2021. The city is forecasted to see an even more rapid acceleration in Interconnection Bandwidth growth of 48% CAGR from 2017 to 2021, compared to 44% CAGR from 2016 to 2020 as predicted last year.

 

“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.”

 

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:

 

  • Digital Business Transformation, which drives the need to support real time interactions between people, things, locations, clouds and data to enable value capture. At least 60% of Australia’s GDP will be digitised by 2021, and 85% of Australian organisations will use flexible IT environments with hyper-agile architecture for application development in the same time frame according to industry analyst firm IDC2.  

 

  • Cybersecurity Risk, which expands Interconnection consumption as firms increasingly shift to private data traffic exchange to bypass the public internet and mitigate against digital threats as data is distributed across a growing number of vulnerability points. Large-scale cybersecurity breaches are one of the most serious risks facing the world today, and the scale of the threat is expanding drastically. Organisations within Asia-Pacific could lose up to a staggering amount of US$1.75 trillion to cyber security incidents – this amount accounts for 7% of the region’s GDP in 20173. By 2021, the global cost of cybersecurity breaches is projected to reach US$6 trillion4.

 

  • Business Ecosystems, which are experiencing an increase in mix of customers, partners and employees and require digital ecosystems and Interconnection to scale. By 2021, organisations using a mix of intermediaries are projected to more than double, and active engagement with industries outside the organisation’s native industry are projected to nearly triple5.

 

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 cases1 along with an IT maturity model. Adopted in combination, these use cases create a digital-ready infrastructure for today’s businesses:

 

  • Network Optimisation to shorten the distance between users and services applications.
  • Hybrid Multicloud to connect and segment traffic between multiple clouds and private infrastructure.
  • Distributed Security to deploy and interconnect security controls at points of digital engagement.
  • Distributed Data to deploy and interconnect data analytics in proximity to users.

 

Highlights/Key Facts

  • The GXI provides significant insight into regional differences in how growth in Interconnection Bandwidth is accelerating in different regions of the world.

 

  • Asia-Pacific:  Benefiting from rapid urbanisation and increasing concerns around cybersecurity and data compliance, Asia-Pacific is anticipated to grow at a 51% CAGR, contributing more than 27% of Interconnection Bandwidth globally.
  • United States: As an early adoption market for digital business and the headquarters for the largest number of multinational enterprises, the United States is expected to see 45% CAGR, contributing more than 40% of Interconnection Bandwidth globally.
  • Europe: A growing number of regulations requiring data compliance is serving as a catalyst of growth for Europe, which is predicted to grow at a 48% CAGR, contributing to 23% of Interconnection Bandwidth globally.
  • Latin America: Emerging market dynamics and growing digital business adoption positions Latin America for expected 59% CAGR, contributing more than 9% of Interconnection Bandwidth globally.

 

  • The GXI also reveals the top four metros in Asia-Pacific to be Sydney, Singapore, Hong Kong and Tokyo in terms of Interconnection Bandwidth. These top metros are expected to contribute to 61% of overall Asia-Pacific Interconnection traffic through to 2021.

 

  • The GXI also forecasts Interconnection Bandwidth growth by counterparty categories, estimating the Interconnection behaviour of each. Surpassing all other categories, Interconnection between Enterprises and Cloud and IT Providers in Asia-Pacific is projected to grow exponentially by 99% CAGR through 2021, supporting businesses building out new digital services and migrating existing workloads to third-party cloud platforms. 

 

  • Within Asia-Pacific, other industries expected to experience solid growth in Interconnection Bandwidth by 2021 include Energy & Utility (83% CAGR), Healthcare & Life Sciences (79% CAGR), Banking & Insurance (79% CAGR), Government and Education (75% CAGR), as well as Business & Professional Services (71% CAGR).

 

  • Equinix continues its commitment to providing Interconnection capabilities in Australia, with a recent US$11 million investment to expand the PE2 International Business Exchange™ (IBX®) data centre in Perth to create an Interconnection hub and gateway to the rest of the Asia-Pacific region, rolling out Equinix Cloud Exchange Fabric™ inter-metro connectivity in Sydney, Melbourne and Perth, and providing access to the Vocus-owned Australia Singapore Cable in six metros across the country.

 

  • Equinix global footprint currently spans 200 IBX data centres across 52 markets, with more than 9,800 of the world’s leading businesses benefiting from the data centre and interconnection services provided. The Asia-Pacific region boasts 40 IBX data centres.

 

Quotes

  • Jason Brown, Group Manager of Enterprise Technical Services at carsales

“Fast and sustainable growth of our business is a key focus as we continue to expand our global presence. Interconnection allows us to create a single, global ecosystem and supports the infrastructure we need to continue to grow. Connecting with Equinix provides us with the ability to access infrastructure on-demand, whilst ensuring that we have complete control over our data and the ability to rapidly scale.”

 

  • David Hicks, Vice President of WW, ISV, OEM and Java Business Development at Oracle

“As enterprises increasingly adopt hybrid cloud architectures to accelerate their digital transformation initiatives, Interconnection is a proven design strategy for reaching cloud services such as Oracle Cloud Infrastructure in an efficient manner. Direct and private interconnection to Oracle Cloud Infrastructure FastConnect network connectivity platform helps provide predictable and consistent performance, isolation and availability.”

 

  • Eric Hanselman, Chief Analyst at 451 Research

“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.”

 

  • Samuel Lee, President, Equinix Asia-Pacific

“From Hong Kong to Sydney, Singapore to Tokyo, Asia-Pacific is a vibrant territory filled with tremendous diversity and opportunities. This is why the region has been continuously able to attract investment from multinational enterprises and is undoubtedly why we are seeing such high projected growth for our region in this year’s Global Interconnection Index. To enable businesses to continue to flourish in our markets, a deep level of digital Interconnection is required so that businesses can simultaneously capture, correlate and transform the data into new customer value. That is why Equinix, as a leader in Interconnection, is perfectly positioned to help the region realise its huge potential. With our expertise in helping enterprises transform, we are confident that our Asia-Pacific customers will continue to thrive in the digital world.”

 

  • Jeremy Deutsch, Managing Director at Equinix Australia

“This second Global Interconnection Index highlights the enormous growth rate of interconnection both locally in Australia and more broadly across the Asia-Pacific region. In light of the growth we have recently announced several key initiatives to assist our customers with their Interconnection needs, including our investment in the expansion of the PE2 facility in Perth, which houses the cable landing station for the ASC cable, and our expansion of the cloud exchange fabric between Sydney, Melbourne and Perth.”

 

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 centre 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.

 

Additional Resources

 

About Equinix

Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centres. In 52 markets worldwide, Equinix is where companies come together to realise new opportunities and accelerate their business, IT and cloud strategies. Equinix.com.au

 

Forward-Looking Statements

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 centres 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 centres; 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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Media Contact (Asia-Pacific)

Annie Ho

Equinix

+852 2970-7761

annho@ap.equinix.com

 

Media Contact (Australia)

Christy Seddon

Howorth Communications

+61 413 890 819

equinix@howorth.com.au

 

1 Cisco – “Visual Networking Index”, 2017
2 IDC – Breaking the Digital Deadlock to Thrive in the Australian Market | Equinix Analyst Reports
3 Microsoft and Frost & Sullivan: Understanding the Cybersecurity Threat Landscape in Asia Pacific: Securing the Modern Enterprise in a Digital World
4 Cybersecurity Regained: Preparing to Face Cyber Attacks, EY, 2017
5 Capitalising on Your Business Ecosystems Economy: Gartner, 2017
6 The four classes of Interconnection use cases were developed by analysing more than 1,800 industry implementations worldwide, are documented in the IOA® Knowledge Base, and have been validated by IT practitioners and industry experts.