Today, we are announcing a second joint venture with GIC to develop and operate hyperscale data centers, this time in Japan. Last year, we launched an xScale™ hyperscale data center joint venture in Europe, and are now excited to bring another to the Asia-Pacific region.
This expansion of large-scale data center facilities supports the global growth of hyperscale companies, including the world’s largest cloud service providers. Over the years, Equinix has worked closely with these customers to support their interconnection and edge requirements in our International Business Exchange™ (IBX®) data centers. Equinix is the world’s largest provider of cloud access with over 40% of major cloud on-ramps in the markets where we operate, and we further added 15 cloud on-ramps in 2019. We are seeing continued momentum with hyperscalers as they generate over US$500 million in annual revenue in our traditional retail business as reported in our 2019 Q4 earnings. These same cloud firms are evolving their platforms and are asking for larger deployments in certain markets – this is why we launched our second hyperscale initiative today.
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Japan is home to the third-largest global economy and the largest electronics industry in the world. As a country that plays a leading role in fueling the digital economy, Japan is a springboard for businesses seeking opportunities across the Asia-Pacific region.
According to IDC, Japan’s market size of public cloud in 2019 was JPY 878B (US$8B), a 23% year-over-year increase. The firm forecasts the market will reach JPY 2.1T (US$20B) in 2024, with a 19% CAGR (2019-24). In 2019, information-oriented SaaS showed more measured growth, while IaaS/PaaS experienced rapid growth. IDC predicts that in the future, as Japan’s market expands and matures, the growth rate of public cloud services is expected to slow down from 23% in 2019 to approximately 16% in 2024. However, the number of public cloud providers and services will continue to increase moving forward, driven by companies seeking diversification of workloads and expansion.[i]
To prepare for this hyperscale cloud expansion in Asia-Pacific, Equinix is partnering with GIC to form a greater than US$1.0 billion joint venture to develop and operate xScale hyperscale data centers in Japan. As with the completed joint venture between Equinix and GIC for xScale data centers in Europe, GIC will own an 80% equity interest and Equinix will own 20% in the xScale facilities. The agreement for Asia-Pacific is expected to close in 2H 2020, pending regulatory approval and other closing conditions.
The three initial xScale facilities in the joint venture – two in Tokyo and one in Osaka – will support the unique workloads of hyperscale companies. The three data centers will bring 138 megawatts (MW) of power capacity to the Tokyo and Osaka markets when fully built-out.
Expanding hyperscale CSP reach and opportunity
This significant investment by Equinix and GIC in the region’s cloud market underscores the growing pace of hyperscale CSP expansion across Asia-Pacific and how the cloud is fueling digital transformation in every industry. In 2019, we demonstrated notable momentum in Asia-Pacific, especially from sales in the region’s growing online gaming, publishing and e-commerce sectors, as hyperscale cloud platforms continue to power these vertical markets. The expansion of Equinix xScale services across Japan will further enrich regional and multinational businesses that rely on Equinix for easy access to the expansive services offered by hyperscale CSP deployments, and gain greater value from a choice of best-in-class CSPs for various application requirements.
The availability of xScale facilities in Japan is also critical to meeting the technical and operational requirements of core hyperscale CSP workload deployments to serve these enterprise customers. Hyperscale CSPs can access a globally interconnected ecosystem of nearly 10,000 enterprises and strategic business partners on Platform Equinix®, which spans 210 Equinix International Business Exchange (IBX) data centers across 55 metros worldwide. Many of these hyperscale CSPs, such as Alibaba Cloud, Amazon Web Services, Microsoft Azure, Oracle Cloud and Google Cloud, already reside in our rich cloud ecosystems in Equinix’s Tokyo and Osaka IBX data centers, which are also hosting more than 985 companies across the nation.
On Platform Equinix in Japan, there are vibrant ecosystems of companies from all industries, including more than 300 enterprises, 135 content and digital media providers, and 100 financial services firms. The xScale facilities will be interconnected to Equinix IBX data centers in Japan, providing hyperscale CSPs with ready access to current and potential customers.
Ensuring business continuity, disaster recovery and compliance
The three xScale data centers in Tokyo and Osaka will also provide much needed geographically redundant zones in Japan for Business Continuity and Disaster Recovery, where business resiliency and service delivery continuity are increasingly important to support the needs of enterprises undergoing digital transformation. Private interconnection between enterprise applications and on-premises and cloud-based data stores also allows businesses to directly and securely exchange data, while keeping data local to a specific country. This will help Japan’s businesses maintain compliance with local data protection and privacy regulations, regardless if the data is located physically on-premises or virtually in the cloud.
A future-proof hyperscale cloud infrastructure
Leading up to the Olympic Games in Tokyo, as well as the country’s 5G service rollout, Japan is seeing growing cloud adoption and digital transformation to support advanced technologies such as artificial intelligence and IoT applications.
Digital transformation via cloud adoption is a vital catalyst for driving the global economy forward. The expansion of hyperscale data centers, such as Equinix and GIC xScale facilities in Europe and Japan, is critical to our enterprise and service provider customers’ digital aspirations, not only in these regions, but around the world.
Learn more about how to accelerate your digital transformation on Platform Equinix by reading the IDC MarketScape Worldwide Colocation and Interconnection Services 2019 – 2020 Vendor Assessment.
[i] IDC, “Japan Public Cloud Service Market Sales Forecast, 2019-2024.”