Forecast for the Data Center Industry in 2021

2020 has been a landmark year for data centers. The impact of COVID-19 means that for many we have adapted our work and social lives to adhere to the various restrictions brought in to combat the spread of the virus, with data centers providing the infrastructure to keep us connected.

But what does 2021 have in store for the data center industry? We’ve made 8 predictions for the next 12 months:

Global traffic will continue to increase as a result of COVID-19

As people have been encouraged to stay home where possible, data consumption has roughly doubled as a result of remote working, VPN usage, video streaming and calls, social media, and gaming. This steep surge in web traffic has meant that networks have had to scale to meet this demand. The storage and mobilization of these higher volumes of data requires not only bigger but also faster networks. The resulting move to 400G network speeds is set to place an even heavier strain on power budgets and lead to a rise in data center running costs.

The data center market is going to bounce back

This year saw a 10% decline in data centre end-user spending due to restricted cash flow during the pandemic, so much so, 60% of planned new facilities construction was stalled due to lockdown restrictions. Despite this, the data center market is expected to grow year-over-year through 2024. According to the latest forecast from Gartner, Inc., end-user spending on global data center infrastructure is projected to reach $200 billion in 2021, an increase of 6% from 2020.

There will be a move towards automation in the physical layer

Due to the spread of COVID-19, Internet operators have looked to restricted or limit the number of on-site personnel in the data center. These contingency plans regarding physical access have naturally sparked forward thinking towards more automation in the physical layer.

According to research by Mordor Intelligence, the data center automation market was worth USD 7.34 billion in 2019 and is expected to reach USD 19.65 billion by 2025, with a CAGR of 17.83% during the forecast period (2020-2025).

Enterprise verticals will continue to migrate to the cloud

The COVID-19 pandemic has kept many IT departments working remotely. As companies now have a distributed workforce, it makes more sense to have decentralized IT networks, and migrating to the cloud or to a hybrid model makes more sense than ever. To facilitate this, colocation providers are now offering more remote management functionality than before. But in order to do this, they need the ability to scale their networks.

This migration to the cloud opens up the potential for more data centre space to become available in built-up areas where office space is no longer required.

Artificial Intelligence/Machine-to-Machine learning will continue to grow

Artificial Intelligence (AI) and Machine-to-Machine (M2M) learning account for a significant amount of internal data center processing and, in some cases, internal data center processing accounts for 70% of all data centre traffic. As AI and M2M learning become more prevalent, more interconnection and faster transceivers are required to support this increase in internal data center traffic.

To compound this, more data-driven monitoring is being made available for push/pull in healthcare, infection control, climate, and security, which will only serve to increase this demand.

5G and the Internet of Things will drive requirements for edge data centers

As data consumption related to 5G and the Internet of Things (IOT) continues to rise, long-haul networks may struggle to carry this increase in data. This, in turn, could drive requirements for edge or localized data centers due to the need for lower latency.

There may be a move towards disaggregated data center design

Data center design may be disaggregated through the utilization of new resource blades that integrate various types of resource with high-performance optical connections, interconnecting them to improve resource utilization. This could result in an estimated 20% higher resource utilization and 30% more revenue than a traditional data center.

Hyperscale networks could continue bypassing public Internet

Hyperscalers will assume more control over the location and specification of global telecom networks as they have emerged as the focal points for carriers, ISPs, and Internet exchanges. As a result, the next year could see an increase in the deployment of cloud gateways that bypass the public Internet and connect directly into public cloud subsea cable infrastructure.

Summary

2021 will bring with it a better indication of the long-term impact of the COVID-19 pandemic. While this remains relatively unclear, what we do know is that global web traffic will continue to escalate, placing more strain on data centre networks.