Opinion: Are Data Centers Heading Towards Commoditization?

By April 2018Uncategorized

Opinion: Are Data Centers Heading Towards Commoditization?

Opinion: Are Data Centers Heading Towards Commoditization?

With product, quality and price deemed increasingly uniform, it is easy to assume that data centers could be on road to becoming a commodity like laptops.

Singapore boosts over 50 data centers of Tier-3 standard and a highly stable power grid in its small land area. With plots of land available in Tanjong Kling, previously better known as the Data Center Park, and with data center projects starting around the island, competition is deemed to be intensified by most.

Apart from the vast supply, the rise of Cloud adoption and virtualization have resulted in ultimate end-users being immune in looking into the base structure, and instead, to believe that they are well covered in terms of resiliency.

Not quite yet – space and power

On the surface, and to many end-users, it is easy to think that data centers in Singapore today are commodity, and that it is just a matter of price.

There is a strong segment of end-users where their IT needs surge unpredictably. Being capable of providing suitable space and power when they need it is key to the successful growth of a data center business today. As one might say – it is about who can build faster and cheaper to grow with their customers.

Not quite yet – connectivity and service levels

For end-user segments such as gaming companies, and Cloud and content providers, connectivity of the data center is a primary consideration, and there is where they tend to spend their bulk of IT budget.

Across the board, service level and professional standard of the provider is absolutely important to end-users. Although the data center market in Singapore has seen new aggressive players offering low pricing, most buyers are still cautious and savvy in evaluating the best balance of price and quality.

Many data centers have also sought to differentiate themselves by offering a range of additional services such as remote-hands and cybersecurity; varying from IaaS to SaaS. Against competition, being flexible is also key. While impossible in the past, today’s data centers could go to the extent of covering migration costs and offer flexible pricing model.

If any, it would be the Cloud services first

There is still available land in Singapore for data center builds. However, high upfront investment, time required for data center builds and strong incumbents make the barriers to entry for new supply high.

Comparatively, barriers to entry for Cloud services are low. One virtual machine is the same as next, and the ability to scale is relatively the same. Neither is their set up of infrastructure as complicated as that of a data center build. With that, maturity of Cloud adoption may make Cloud services the next commodity with their margins competed away.

Till then, plan, choose and negotiate wisely. Afterall, data centers are the base structure regardless of Cloud adoption.

Keen to know how Cloud would do in the rest of the world? Join 500 senior executives and hear from experts like our co-founder at the World’s first ever event for Data Center, Cloud and Connectivity buyers – the Global Selection Convention 2018, organised by W.Media.

See how hyperscalers, banks, government, ecommerce, etc. make their decisions differently. As well as key datacenter and cloud providers showcasing their global footprint and expertise at APAC DC 2018 and our unique thought leadership sessions.

Unless you wish to visit any of the data centers in Asia, then to feel free reach out at our event concierge team to plan an itinerary for you.


Vincent Liew

Co-founder, W.Media

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