The PTC Webinar Series: Frictionless Business™ kicked off on 15 September with Session 1: Impact of COVID-19 on Data Centers and Network Infrastructure. Bill Barney, chairman and managing partner for Asian Century Equity, served as the moderator of a candid C-suite discussion that explored what new norms are being defined as today’s massive escalation of digital infrastructure development is creating complex new realities.
- Dan Caruso, CEO, Zayo
- Keri Gilder, CEO, Colt
- Bevan Slattery, Founder, SUB.CO / Cloudscene / Superloop / Megaport / NEXTDC
- Bill Stein, CEO, Digital Realty
The session’s discussion was framed around six key questions facing the industry.
Has COVID-19 had a positive or negative impact on the technology infrastructure business?
Barney highlighted slides showing the growth of services within the industry, where growth had previously been measured in double digits year-over-year, we are now seeing double-digit growth month-over-month, even with services that were typically very low growth. As a typical example, BT saw a 75 percent growth in gaming, 34 percent growth in VPN, 20 percent growth in web traffic, and 12 percent growth in video in one week. Zoom, which has become a household name, saw its business grow 20 times in three months. Many companies that were previously not known by average consumers have become a critical part of daily life.
“The world as we knew it in 2019 is never going to be that world again. This is a permanent and a significant change that marks the ending of one era and the beginning of another,” said Dan Caruso, CEO of Zayo. “The businesses that are tech-forward are accelerating, and the path to them having more of an impact is more clear, and the businesses that have not moved forward in that environment are going to be left even farther behind.”
All of this growth is happening at hyperspeed.
Has COVID-19 created a new demand curve for infrastructure?
ITU data shows fiber and data center companies have seen a game change in terms of demand, with 30 to 40 percent increase, something that hasn’t been seen in the industry since the dawn of the Internet in 2000. Normal broadband demand has jumped 50 to 100 percent in terms of the usage pattern at various locations. Has COVID-19 completely shifted the demand curve, and will that shift be sustainable over the long-term?
“I think 2020 is the year of the dog. Not in reference to Chinese astrology, but from a dog year’s perspective,” stated Bevan Slattery, founder of SUB.CO, Cloudscene, Superloop, Megaport, and NEXTDC. “Absolutely demand has increased massively. We’ve taken the demand that we would normally see over 2021, 2022, and 2023, and accelerated it into six months. We’ve brought forward the demand curve and we’re going to be operating now from the demand that you’d expect to see in 2023.”
What happens when the “COVID-19 Music” stops?
March 2020 saw two of the largest stock market corrections in history, which lends to the theory that there may be a global depression ahead of us, but there are signs of an economic recovery already as well.
“This crisis will have lasting effects on society and business on many levels,” said Bill Stein, CEO of Digital Realty. “It’s going to force enterprises to be nimbler and to accelerate their digital transformation, and I think it will make them more willing to invest in mission-critical digital infrastructure.”
This is a new world order, with the work-from-home policies businesses have become more efficient in this digital environment. Are we at the beginning of an expansion or on the edge of a precipice?
Stein continued, “Coming out of this you’ll see a significant uptick in M&A activity. This increases the amount of data that is being exchanged as these massive deals are being evaluated. Digitally-enabled commercial transactions are going to be a far greater piece of buying and selling in the future than they have in the past and that will continue just because of the ease of doing business. There’s going to be increasing localization for data storage and data aggregation at the local level and this will be redundancy driven in part by the need to meet legal requirements and compliance requirements as well as edge. And by 2023, the security products are going to be hybrid of both physical and cyber.”
Will technology growth carry us through the rest of market slump?
Partially an academic question, as the rate of technological advances has moved to a rate faster than humans can adapt. Will computers make the next round of innovation, or is this just a phase with an uptick in technology?
FIfty percent of the United States stock market is in the hands of five companies: Apple, Amazon, Microsoft, Alphabet, and Facebook. Will these companies lead us into the next decade or will other companies arrive to replace them? Most of these five companies have histories of less than 10 years, so their dominance has mostly been the last five years.
“If you look at the past five months of the pandemic, the one thing that became predominantly clear was the need for resilience in this environment,” stated Keri Gilder, CEO of Colt. “Data sovereignty is more important now and there are five major elements playing toward a more automated digital environment in all parts of the ecosystem. How do we build the ecosystem together?”
Will the emerging markets play a role in the post-COVID-19 world?
Nearly three billion people around the world are not connected to the Internet, and two-thirds of that audience is in a discreet part of Asia, which also includes the youth of the next two decades, providing the next generation of consumers. When you look closer, you realize that there is very little infrastructure in these areas. This creates both a challenge and a massive opportunity for growth in the next 20 years, if the infrastructure can be deployed.
“When you look at our network expansion in Asia, our demand is driven by capital market clients. If they are looking for connectivity to exchanges in China, India, Mumbai, etc., those are all areas that are always on our radar if we need to expand into those markets or not,” stated Gilder. “If you look across the globe, there is a company somewhere that has some sort of footprint. The question now becomes, with software-defined networking, do you actually need to build into these scenarios or do you need to partner better across the world to enable a more holistic view of the world and enable a better connectivity environment for these emerging markets as they bridge forward?”
Are we finally at the arrival of the long-awaited FOCs or Edge Data Centers?
Since his days at Pacnet, Barney has anticipated this change in the data center infrastructure, and he believes, for the first time, we’re actually seeing this now. “Forward operating centers (FOCs), or edge data centers, are network-centric centers where they have an ecosystem of telcos, OTTs, ISPs, and corporates. This is a change of the data center from the place where you store the data and do the industrial compute to where computers and applications reside and feed into IoT and next generation types of services that are part of the new Internet,” said Barney.
Are we coming to a world where we continue to see massive growth in edge data centers, or will we continue to see hyperscalers growing? What’s the model going forward? Barney believes edge data centers will continue to grow rapidly as COVID-19 has pushed the world into fast-forward in building next generation infrastructure to meet requirements of our “new reality.”
View the full webinar below:
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