Ms. Danni Xu, Research Analyst, ICT Practice, Asia Pacific at Frost & Sullivan said that the Hong Kong Government's continuous support for the sector will see Hong Kong remain as a key market in the data center sector.
She added that Hong Kong's strong political connection to Mainland China allows it to act as a gateway for global companies that seek to tap into opportunities in China's market.
"Moreover, Hong Kong's business-friendly and free-trade environment has drawn a number of multinational corporations (MNCs) to set up their regional headquarters in the country. This has brought in numerous investments and job opportunities, and created demand for data center services," she said.
Ms. Xu said that the Hong Kong data center market is expected to grow at a CAGR of 15.3 per cent to reach US$ 802.6 million in 2019.
However, she added that service providers may choose to locate a part of their facilities outside of Hong Kong to reduce their capital and operating expenditure and tap into the increasingly demand of business continuity planning and disaster recovery service.
Ms. Xu said that cloud computing emerged as the fastest-growing segment of the data center market over the last three years and helped to add value to service providers' traditional portfolios. This created new revenue streams and led to strong growth in revenue.
Frost & Sullivan estimates that each dollar spent on cloud services drives an additional spending of 20 25 cents on other services, such as connectivity services, hosting services, and information security services.
Ms. Xu said that the popularization of cloud computing has led to the emergence of cloud-centric data centers, such as CITIC Telecom CPC's cloud centers and Pacnet's HKCloudSpace2 data center, which are built with multi-tenancy and pay-per-use models as a key theme.
"In future, this multi-delivery model environment is expected to give rise to IT-as-a-Service, where IT budgets would cease to exist at an organization level and instead, become embedded into business units' budgets," she added.
She also said that consequently, IT departments would shrink and Chief Information Officers (CIOs) are likely to evolve into internal service providers, whose roles revolve around business innovation, rather than technology innovation.
Ms. Xu noted that a majority of multinational companies headquartered in Hong Kong foresee growing demand in most parts of the Asia-Pacific region. Hence, they are actively expanding their footprint and shifting their business focus beyond the country. As a consequence, besides strengthening the local business, data center and cloud computing service providers are also looking to set up overseas facilities, to tap regional businesses not only to develop new customers, but also to facilitate their current customers' expansion pace, she added.
About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.
Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.
The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.
For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?
Contact Us: Start the discussion | Join Us: Join our community | Subscribe: Newsletter on "the next big thing" | Register: Gain access to visionary innovation.