Dell to build new data centre as mini investment boom for sector gathers pace

Activity in the data centre industry is starting to pick up, with international computer giant Dell announcing overnight it will build a new centre in Australia to service demand for data protection.

But the move comes amid a myriad of announcements in the sector – former Pipe chief Bevan Slattery is now running the ASX-listed NextDC to provide data hosting services, while security company Blue Coat announced plans for a Sydney location late last week.

Hewlett-Packard has also announced it will construct a data centre facility in New South Wales, while Fujitsu has announce plans for a facility of its own.

The announcements highlight growing demand for not only data hosting services that support cloud-based applications and programs, but also a shift towards environmentally friendly data centres that take up less power.

Ovum principal analyst Jens Butler says the amount of investment occurring in the data centre space is “amazing”.

“I wouldn’t say it’s a joke, but it’s definitely amazing. The amount of investment that’s happening here – especially in areas like Canberra – is quite large.”

“There seems to be a new announcement made every month.”

Butler says the growing demand for data centres comes from two key areas – the growth of cloud-based services, and the growing realisation among SMEs that they need to back up their data in case of emergencies.

Butler says the natural disasters in Queensland have increased the support for this view, saying more companies are reviewing their recovery options in case of an event that wipes out their entire systems.

“Many businesses are starting to consider their recovery plans. Brisbane was extremely lucky to be perfectly honest, that it wasn’t damaged more than it was. There will be a lot of businesses considering how to protect their data in the next few months.”

“The other growth area is the use of cloud-based services, many businesses wanting to get in on the cloud space.”

Dell founder and chief executive Michael Dell told The Australian that demand is growing for data facilities that provide “multi-tenant” type capabilities, which usually require larger floor pans.

“We will build a data centre here in Australia… we’re building data centres in about 10 countries around the world,” Dell said.

“What we’re finding is customers want to take advantage of the economics of the public cloud, but they really don’t want a public cloud… what they want is a private, secure cloud that has a level of assurance and security with it.”

It is true data centres are mostly being constructed by companies with huge amounts of capital at their disposal – big names like HP and Apple are investing tens of millions purely because of the scope of the equipment needed.

Just last week, Bevan Slattery’s new company NextDC returned to the market just four months after listing in order to raise a further $33.6 million to acquire a new property and expand its existing facilities in Melbourne and Brisbane.

“Historically, data centres are ridiculously expensive,” Butler says.

“It takes 18 months to three years to build these facilities, so you have HP and Fujitsu, companies of that stature building facilities of their own.”

“There has always been a lack of supply in the data centre space, and so people want to jump on the whole cloud bandwagon.”

Rising electricity costs are another large factor, Butler says, with businesses attempting to save on their own IT costs by investing in outsourcing.

“The question is really, when will supply exceed demand? That’s the risk factor… however, I don’t think it’s going to happen any time soon.”