Tier1 Research: Global Multi-Tenant Internet Datacenter Market Shows Remarkable Growth as Datacenter Demand Exceeds Supply

from T1R press release:

>>NEW YORK - (Business Wire)

A new report by Tier1 Research finds that the global multi-tenant datacenter market has shown remarkable growth in the past 12 months. Demand is up 14% on a global basis, while supply is up only 6%, exacerbating an already lopsided supply/demand curve.

T1R analysts found that several factors are contributing to this demand, including the extremely high cost of datacenter construction, specialized skill sets, aging of existing enterprise datacenters and, especially, the primacy of the Internet as a vehicle for service and application delivery. While demand growth may be slightly depressed in 2009 due to larger macroeconomic factors – particularly in specific markets – demand is expected to rebound strongly as the economy recovers, surpassing current levels significantly. Even during the slowdown, the inability of enterprises to build their own datacenters will outweigh any impact from decreased IT spending.

"The recovery of the economy from the current slowdown will likely result in a temporary exacerbation of price increases, as demand will grow significantly faster than supply during the first 12 months of a recovery. This is due to the datacenter construction cycle, which varies from nine months (for a phased expansion) to 18 months (for a greenfield build). Demand, of course, has no built-in delay, which will likely cause the sort of cross-market price increases seen during 2005,” said Jeff Paschke. “It should be noted that in addition to the normal increase in IT spending associated with a recovery, there has been considerable speculation concerning Internet traffic increases in the 2011-2012 time frame, which will have a complementary impact on datacenter demand.”