Why the data center industry will not see oversupply…

There seems to be chatter out there today that the data center industry is seeing signs of over supply in certain markets. Estimates of 200mw’s of supply have been mentioned. This sounds about right in our estimation. The 200mw’s may not be fully built but rather the capacity that it could be. The market also has absorbed approximately 160+ mw’s per year in new leases leaving a 40 mw capacity buffer. This seems to be a reasonable buffer to us for a high growth market…but what about hyper growth?

I wanted to point out a few reasons why this is not enough and why a fast growing industry cannot keep up with demand until it stabilizes. Here are a few of the reasons why demand will continue to outstrip supply in the near term:

• In the next 10 years, we will see a 20-fold increase in home networking speeds. (Source: Cisco IBSG, 2009)
• The Internet will evolve to perform instantaneous communication, regardless of distance. (Source: Cisco IBSG, 2009)
• The first commercial quantum computer will be available by mid-2020. (Source: Cisco IBSG, 2009)
• By 2020, a $1,000 personal computer will have the raw processing power of a human brain. (Sources: Hans Moravec, Robotics Institute, Carnegie Mellon University, 1998; Cisco IBSG, 2006-2009)
• Today, we know 5 percent of what we will know in 50 years. In other words, in 50 years, 95 percent of what we will know will have been discovered in the past 50 years.
• The world’s data will increase sixfold in each of the next two years, while corporate data will grow fiftyfold. (Source: Technorati)
• By 2015, Google will index approximately 775 billion pages of content. (Source: Cisco IBSG, 2009)
• By 2015, we will create the equivalent of 92.5 million Libraries of Congress in one year. (Source: www.humanproductivitylab.com)
• By 2020 worldwide, the average person will maintain 130 terabytes of personal data (today it is ~128 gigabytes). (Source: Cisco IBSG, 2009)
• By 2015, movie downloads and peer-to-peer file sharing will explode to 100 exabytes, equivalent to 5 million Libraries of Congress. (Source: www.humanproductivitylab.com)
• By 2015, video calling will be pervasive, generating 400 exabytes of data—the equivalent of 20 million Libraries of Congress. (Source: www.humanproductivitylab.com)
• By 2015, the phone, web, email, photos, and music will explode to generate 50 exabytes of data. (Source: www.humanproductivitylab.com)
• Within two years, information on the Internet will double every 11 hours. (Sources: University of California at Berkeley School of Information Management and Systems; IBM)

These are just a few of the top 25 technology predictions by Cisco’s Dave Evans. If just a few of these predictions are correct, we are in for an exciting ride in the data center business. Take a few moments to think about the statements above…we can’t keep up; 200mw’s is nowhere near enough space! Dave we are listening; keep up the great research.

Happy hunting…
Best,
Pete