October 15, 2020
Annual Market Study Reveals Pace at Which COVID-19 is Accelerating Digital Transformation
Digital Service Providers Forecast to Increase Private Connectivity 5x Between 2019 and 2023, Driven by Greater Demands from Enterprises to Close Digital Gaps at the Edge
DUBLIN, Ireland — October 15, 2020 — The latest Global Interconnection Index (GXI), an annual market study published by Equinix, shows that the COVID-19 pandemic has already had a dramatic effect on how businesses are planning their digital infrastructure initiatives over the next three years. According to this, the fourth volume of the report (Vol.4), digital service providers, within industries like telecommunications, cloud & IT services, content & digital media and technology providers, are forecast to increase private connectivity bandwidth 5x by 2023, driven by greater demands from enterprises to close digital gaps at the edge.
As the pandemic continues to accelerate the shift to digital, enterprises facilitating more remote working, such as telecommunications and cloud & IT providers, are expected to contribute to 54% of the total interconnection bandwidth growth in EMEA, outpacing other industries in the region. Frankfurt, Amsterdam, Paris and London are predicted to be the top metros in Europe for interconnection bandwidth growth, with the region as a whole expected to account for 23% (3,782 Tbps) of the projected global installed interconnection bandwidth.
The report also forecasts that overall interconnection bandwidth—the measure of private connectivity for the transfer of data between organisations—will achieve a 45% compound annual growth rate (CAGR) from 2019 to 2023, within the EMEA region. The expected growth is driven by digital transformation, and specifically by greater demands from enterprises extending their digital infrastructure from centralised locations to distributed edge locations. This comes as businesses scale and support real-time interactions by strategically interconnecting workflows closer to, and across people, things, locations, cloud and data. The capacity of this connectivity is equivalent to 64 zettabytes of data exchange, which is enough bandwidth for every human on the planet (7.8 billion) to transmit their full DNA sequence in an hour.
The GXI Vol.4 provides insight on how global macro trends and COVID-19 have impacted certain industry segments:
- Digital adoption patterns are changing in response to massive disruptions
- According to the GXI Vol.4, the digital adoption pattern has altered, with service providers now forecast to provision more interconnection bandwidth (10,284 Terabits per second (Tbps) by 2023) than enterprises, by a factor of nearly 2x.
- However, much of this service provider demand is anticipated to be in support of enterprises that are prioritising their digital transformation in preparation for post-pandemic recovery.
- The report also predicts that enterprises with a digital infrastructure will extend their competitive advantage and continue to lead in business growth, while those without have struggled and are dependent on service providers to transform their business models.
- Traditional businesses are moving workloads to an edge-first architecture
- The GXI Vol.4 predicts that traditional business, within industries like banking & insurance, manufacturing and business & professional services, will represent a combined 30% of global interconnection bandwidth by 2023. This is led by the growing need to move workloads to the digital edge while scaling core IT infrastructure. By 2023, these traditional businesses are expected to reach a peak interconnection bandwidth growth rate of 50% annually.
- Healthcare & life sciences and government & education are expected to lead the traditional enterprises in their interconnection growth rate as public and private initiatives on artificial intelligence (AI) and machine learning (ML) are forecast to drive a combined 47% CAGR in interconnection bandwidth from 2019 to 2023.
- Organisations are benefiting from the “network effect”
- Organisations are maximising their digital advantage by building a presence in locations with the most users, largest number of providers and the densest activities, known as the “network effect.” According to IDC, 80% of digital leaders will see the impact of connecting to multiple ecosystems, including improving their value to end customers by 2025.
- The need for application exchange in digital ecosystems to support real-time engagement is essential and creates a network effect for businesses. The GXI Vol.4 predicts that connectivity from service providers to networks and cloud & IT service providers will be the two main sources of ecosystem interconnection, with an estimated 49% combined CAGR from 2019 to 2023.
Due to the general uncertainty confronting the enterprise community, along with fluctuations in national and county restrictions, the importance of digital infrastructure and data connection for Irish businesses to support remote working has never been more pronounced.
The GXI Vol. 4 delivers insights by tracking, measuring and forecasting growth in interconnection bandwidth—the total capacity provisioned to privately and directly exchange traffic, with a diverse set of partners and providers, at distributed IT exchange points inside carrier-neutral colocation data centers.
- Charles O’Reilly, General Manager, AirSpeed:
“The ongoing pandemic instigated a sudden shift towards working from home for large swathes of Irish professionals. As a means of ensuring seamless connectivity with partners, suppliers and clients, our customers have placed huge importance on cloud connectivity. In some respects, the pandemic has accelerated the adoption of cloud. Through Platform Equinix®, AirSpeed is giving our customers the tools to privately interconnect with an expansive ecosystem of cloud service providers, which, in turn, enables them to derive greater value from the cloud and establish a competitive edge. Obviously, a fundamental element of this is the provision of fully managed, secure and reliable access or connectivity to the cloud.”
- Maurice Mortell, Managing Director, Ireland, Equinix:
“Irish businesses have made rapid progress on their digital journeys since the outbreak of COVID-19, and preparation for a post-pandemic recovery requires continued focus on digital transformation initiatives. Adopting a mature, cloud-first strategy that utilises an interconnection oriented architecture such as Equinix can provide ensures that a business stays connected with its partners, staff, customers and prospects at anytime, anywhere and in any location.”
- Eugene Bergen Henegouwen, President, EMEA, Equinix:
“The COVID-19 pandemic has only accelerated the digital transformation journey that businesses across the region were already undergoing. Europe’s predicted 45% CAGR is indicative of the increased demands from enterprises to enhance their interconnection capacity in order to compete in an increasingly digital economy. It’s now even more critical for businesses to find innovative ways to interconnect with their customers and partners to gain a competitive advantage in an increasingly remote and dispersed environment.”
- Global Interconnection Index (GXI) Volume 4 [report]
- GXI Volume 4 Blog [blog]
- Equinix 2019-20 Global Tech Trends Survey [report]
- Your Data Center May Not Be Dead, but It’s Morphing [Gartner report]
- Total Economic Impact Study (TEI) [Forrester report]
- Future of Digital Infrastructure—Ever Faster Delivery of Reliable Digital Services and Experiences [IDC report]
About the Global Interconnection Index (GXI)
The Global Interconnection Index, published annually by Equinix, delivers insights that drive digital business advantage by tracking, measuring and forecasting growth in interconnection bandwidth—the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points. The Global Interconnection Index is the industry's only market study that projects how interconnection bandwidth growth will unfold through 2023. The report serves as a market baseline that analyses the deployment profile of thousands of ecosystem participants using carrier-neutral colocation data center providers globally. This data was combined with local and regional market data (including macroeconomic trends, market demographics and industry concentrations) to form a weighted demand multiplier to assist in predicting growth and assess impact on digital business transformation. A detailed methodology description is included in the Global Interconnection Index.
Equinix (Nasdaq: EQIX) is the world’s digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today’s businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements about interconnection bandwidth growth, the rate of adoption of digital transformation, and the benefits of the “network effect”. Actual results may differ materially from expectations discussed in such forward-looking statements and the predictions made from the Global Interconnection Index. Factors that might cause such differences include risks described from time to time in Equinix filings with the Securities and Exchange Commission. In particular, see recent Equinix quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
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 “IDC FutureScape Webcast: Worldwide Digital Transformation 2020 Predictions,” IDC, Doc # US46287720, May 2020.