Data centers need to speed up and improve quality to cope with changes through innovation

2020 is a critical year for the large-scale construction of 5G networks in my country, and it is also a year in which the construction of new infrastructure (referred to as "new infrastructure") has attracted much attention. Affected by the COVID-19 epidemic, the downward pressure on the global economy in 2020 has increased, and the central government has repeatedly emphasized that it will promote the construction of "new infrastructure" represented by 5G and data centers.

Among them, data centers, as an important supporting sector of "new infrastructure", have ushered in a new historical development opportunity. Data centers are the infrastructure for storage and computing, which can be connected to cloud computing and AI upwards, and directly connected to information modules such as cloud computing, edge computing, and the Internet of Things downwards. Industry experts believe that in order to further build the core pillar of "new infrastructure", the development of the data center industry needs to be further accelerated and improved to respond to data center changes with innovation.

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Data centers are poised to take off, and the industry chain is benefiting

As the "founder" of infrastructure, data centers have always been unknown at the bottom. However, with the increasing popularity of dataization today, no matter how communication technology is upgraded or how Internet applications are innovatively developed, they are inseparable from data calculation, storage, transmission, analysis and other links. The importance of data centers is self-evident. Experts from the China Academy of Information and Communications Technology said that data centers can better reflect the connotation of "infrastructure + technology" in the "new infrastructure".

In fact, data centers are a byproduct of the development of global information technology. As we all know, the development of global information and communication technology has roughly gone through five stages: the first generation of information technology represented by telegraphs and telephones; the second generation of information technology represented by computers; the third generation of information technology represented by the Internet; the fourth generation of information technology represented by big data and cloud computing; and the fifth generation of information technology represented by the Internet of Things, the Internet of Numbers, and the Internet of Intelligence. The prototype of the "data center" appeared in the second generation of information technology represented by computers, and with the continuous iteration of information technology, it continues to play the role of a symbiotic infrastructure.

The data center industry chain involves the construction and operation of computer rooms, and also needs to consider issues such as data calculation, transmission/interconnection, and security. It requires servers, switches, routers, optical modules, memory chips, optical fibers, and other equipment. These links belong to the bottom layer of the "new infrastructure."

In the server field, according to statistics from market research firm IDC, Inspur Information occupies 33% of my country's server market share. Huawei, New H3C under Tsinghua Unigroup, Lenovo, Dell, Sugon and other manufacturers also have important say in the server field. 2020 is expected to be the starting point of a new cycle of the server industry.

In terms of network equipment, Cisco holds more than half of the global market share. In the domestic enterprise-level network equipment switch and router market, Huawei and H3C hold about 60% to 70% of the market share.

In terms of optical modules, market research firm LightCounting predicts that the compound growth rate of the optical module industry will reach 20.5% from 2019 to 2024. With the advancement of 5G commercialization, the rapid development of industries such as 5G networks, high-speed interconnected data centers, and communication clouds, the application scenarios and number of connections of optical modules are growing rapidly, and new opportunities for industrial development are ushering in.

With the advancement of 5G commercialization, traffic explosion is just around the corner, and the growth of IDC demand is certain. In recent years, the growth of China's IDC business market has always led the world. The "2019-2020 China IDC Industry Development Research Report" newly released by Kezhi Consulting shows that the scale of China's IDC business market reached 156.25 billion yuan in 2019, a year-on-year increase of 27.2%, and the absolute value of the market size increased by more than 30 billion yuan compared with 2018. At the same time, major emerging industries that my country focuses on developing, such as artificial intelligence, telemedicine, and industrial Internet, all need data centers as industrial support. The big data center construction boom brought about by the "new infrastructure" will have a huge impact on the data hardware track, cloud services, and small and medium-sized enterprises.

Looking at the evolution and development history of the IDC industry, customer needs and technological changes at each stage determine the service form of each stage. At present, the concept of data centers in the third stage has expanded, the scope of services has expanded, and more emphasis has been placed on high-performance architecture. With the development of cloud computing technology, data centers are moving towards virtualization and integration. The development of cloud computing and 5G has become the main driving force for the growth of large data centers.

IDC oligopoly has taken shape, with concentrated layout in core cities

The replacement of underlying technologies will lead to a surge in business and data volume. With the support of cloud computing, Internet traffic has surged, and the business development of data center service providers has also moved forward simultaneously. From a global perspective, the global IDC service market is dominated by third-party IDC service providers. Equinix of the United States ranks first in market share, accounting for about 15% of the global hosting market, followed by Digital Realty, accounting for about 9%, and China Telecom ranks fifth in market share, accounting for about 3%. The overall market structure is relatively fragmented, but as operators gradually withdraw from the IDC market, and enterprises gradually transfer workloads to the cloud or use hosting facilities, the number of mergers and acquisitions in the data center industry has increased year by year, and the concentration of the IDC market is expected to further increase, and the Matthew effect will gradually strengthen.

The IDC market in my country is dominated by operator data centers, which account for about 65% of the market share by virtue of their network bandwidth and computer room resource advantages; followed by third-party IDC service providers. In recent years, third-party data centers such as GDS, 21Vianet, Sinnet, and Dr. Peng have gradually emerged. Based on their own IDC resources in core cities and strong financial strength, they have built data center computer rooms, mainly to meet the IDC needs of core cities and fill the gap between supply and demand, and have certain resource scarcity barriers. Some experts pointed out that the land/power resource expansion capabilities and strong financial strength in first-tier cities and their surrounding areas have built a moat for third-party IDC service providers.

In terms of layout, overseas IDC giants have focused on economically developed central cities. This coincides with the layout of domestic data centers. Cui Kai, senior research manager of IDC China, said that the areas where data centers are more concentrated are still super first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. The rack rack rate is mostly between 60% and 70%, showing a relatively saturated situation. However, due to economic development factors, the rack rack rate in some western provinces is less than 30%.

In recent years, the construction of domestic data centers has entered a climax, a large amount of capital has entered the data center industry, and the number of data center companies has increased significantly. As of the end of June 2019, there were 3,210 Internet data center business licensed companies nationwide, of which 2,153 were cross-regional companies, accounting for 67.1%. Data center business licensed companies are mainly concentrated in Beijing, Guangdong, Shanghai, and Zhejiang.

It is not difficult to find that the overall layout of my country's IDC market presents a pattern of "mostly in the eastern coastal areas, concentrated in core cities, and relatively few in the central, western and northwestern regions". There are three main reasons for this pattern: First, most Internet companies are located in core cities, and there are more "hot data" with high timeliness that need to be processed, resulting in a situation where data centers in first-tier cities are in short supply; second, core networks are mainly distributed in first-tier cities. The construction of data centers in these regions can meet customers' requirements for low latency and stable operation, improve efficiency and save costs; finally, the construction demand for data centers in the central and western regions is mainly to process some "cold data" with low effectiveness. In addition, the electricity cost is relatively low, and remote deployment can reduce costs.

Responding to challenges with innovation: large-scale + cloud + edge

With the advent of the 5G and AI era, data centers will become the core control nodes and content carriers of future networks. At the same time, the "new infrastructure" has put forward new requirements for data centers in terms of carrying capacity, security, cloud network connection capabilities, energy conservation and environmental protection, etc. Therefore, data center construction has ushered in new opportunities as well as new challenges.

On the one hand, the explosive growth of traffic has led to the continuous expansion of the scale of data center networking, which in turn has triggered a series of changes in networking architecture, technology, and operations. At the same time, it is also necessary to take into account various requirements such as large capacity, scale effect, high reliability, and scalability; on the other hand, with the continuous growth of corporate business, data centers that support IT systems are facing huge challenges of excessive energy consumption.

At present, the migration of enterprises in various industries to the cloud has become a general trend in the development of information technology. In order to expand their service coverage, cloud computing service providers have increased the number and scale of their data centers, thereby obtaining strategic geographical layouts and economies of scale in single data, mainly to reduce costs and provide differentiated products to improve industry competitiveness. Therefore, large-scale cloud data centers in the 5G era will be more competitive, not only in terms of cost, but also in terms of security, flexibility and technological evolution. Establish a crushing advantage over traditional data centers. In the future, there are three major directions for the development of data centers in my country: large-scale data centers + distribution in the core areas of cloud computing + distributed deployment of edge computing.

Large and medium-sized data centers serve cloud computing to process "hot data" and handle time-sensitive businesses; ultra-large data centers are deployed remotely to reduce costs and process "cold data"; edge computing data centers are deployed to address ultra-low latency, high real-time performance, high security, localization and other needs.