The fourth annual Global Interconnection Index (GXI) market study, published by Equinix, reveals how digital leaders are moving to the edge and harnessing interconnection — the direct and private traffic exchange between key business partners — to build and interconnect digital infrastructure that creates competitive advantage.
Set against the disruption of the global COVID-19 pandemic and a backdrop of macro trends that pose new digital transformation challenges, GXI Vol. 4 tracks, measures and forecasts the growth of interconnection bandwidth, a key barometer of global digital adoption.
Interconnection bandwidth is 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. The GXI Vol. 4 predicts that installed interconnection bandwidth capacity will grow 45% annually worldwide between 2019 – 2023, reaching 16,300+ Terabits per second (Tbps) by 2023.
The study also sheds new light on the industry and ecosystem interconnection bandwidth compound average growth rates (CAGR) in North America, Latin America, Europe and Asia-Pacific, and uncovers new trends and use cases. For example, did you know that service providers’ interconnection bandwidth capacity is predicted to surge by 5x over the next four years to aid enterprises in their digital adoption initiatives during the COVID-19 pandemic?
Worldwide Interconnection Bandwidth Growth CAGR (2019 – 2023)
The GXI also provides enterprises with key insights into the next steps they can take for a successful digital transformation. Based on an analysis of thousands of implementations from hundreds of digital leaders on Platform Equinix® worldwide, it illustrates how they are deploying, extending and enhancing their digital infrastructure to be prepared for whatever comes next.
See How Digital Leaders Are Prepared for Whatever Is Next
GXI Vol. 4 tracks shifts in the digital economy and their impacts on digital business. Explore how leaders use their digital infrastructure to fuel growth, where it’s happening and how you can use interconnection to stay competitive.Read More
Macro trends increase digital transformation challenges
A series of global trends are converging, placing compounding pressures on organizations as they strive to digitally transform. Consider the following:[i]
- 70% of new value created over the next decade will be based on digitally enabled business models.
- By 2030, urban areas are projected to house 60% of people globally.
- DDoS attacks have grown more than 270% year over year, while 30% of companies are being challenged by thousands of insecure devices connecting daily without IT oversight.
- Data is growing at a compound rate; however, less than 3% of that data is being analyzed for enterprise intelligence.
- By 2025, 80% of digital leaders will see the positive impact of connecting to multiple ecosystems, including improving their value to end customers.
As these macro trends of digital business, urbanization, cybersecurity, data volumes/compliance and business ecosystems continue to collide, it has become increasingly essential to have the right interconnection strategy at the center of your digital infrastructure.
COVID-19 effect increases service provider interconnection
At the outset of 2020, the global COVID-19 pandemic sent companies into digital overdrive. They accelerated digital services, such as telemedicine and e-learning, and got much more connected to cope with the surge in remote traffic created by worldwide stay-at-home orders. Perhaps the most prevalent example of this change in action was the growth of Unified Communications as a Service (UCaaS). During the pandemic, Zoom scaled its UCaaS platform to support a spike from 10 million daily online meeting participants in December 2019 to 300 million in April 2020.[ii]
You can see these trends manifested in the GXI Vol. 4 findings. Whereas previous GXI studies showed enterprises firmly in the lead when it came to interconnection bandwidth growth, this year’s findings estimate service provider interconnection bandwidth will soar by an estimated 49% during the five-year forecast period.
This reflects the fact that service providers are jumping in to help enterprises increase their interconnection bandwidth capacity to scale up their digital infrastructure. Priorities like building out software-defined wide area networks (SD-WAN) and hybrid multicloud architectures have moved from leading edge activities to absolute essentials for digital leadership. The greatest benefactors of this shift include Telecommunications service providers, representing nearly 31% of all interconnection bandwidth. Cloud & IT Services represents 22% of the mix and Content & Digital Media claims 10% of the total.
When it comes to enterprise interconnection bandwidth trends, the GXI reports that Healthcare & Life Sciences and Government & Education are leading traditional enterprise industries by 47% and 48% CAGR, respectively as they meet new mandates for online services such as telemedicine and e-learning. In fact, the GXI predicts enterprises will regain their dominance as the source of interconnection bandwidth in 2023, mainly driven by a predicted 4x increase in growth from digital leaders in Healthcare & Life Sciences and Government & Education over the next five years.
Interconnection Growth (Tbps) Between Enterprises and Service Providers – 2019 vs. 2023
Regional interconnection growth continues to increase
Even in the face of a slowing global economy, the five-year interconnection CAGR paints a picture of regional digital advancement, with LATAM (+50%) and AP (+47%) companies accelerating faster than the digital leaders in North America (+43%) and Europe (+45%).
These regions are playing digital catch-up, with industry sectors that were lagging in transformation now accelerating their interconnection growth as they respond to new pandemic-driven digital requirements. Upcoming blogs will highlight the regional trends from the GXI Vol. 4 report in more detail.
Regional Interconnection Growth (Tbps) – 2019 vs. 2023
Ecosystem trends create new forms of collaboration
The GXI also sees a spike in cross-industry/ecosystem digital service collaboration, which is expected to drive a 5x increase of interconnection bandwidth by 2023. Faced with COVID-19 public gathering restrictions, many digital leaders are finding new and innovative ways to share their platform capabilities with their customers, in turn driving greater interconnection to those platforms.
A great example of this type of cooperative collaboration is Epic Games, which is offering its Fortnite online gaming platform to musical artists as a venue for streaming live concerts to remote audiences during the pandemic. Fortnite saw a record turnout of 12.3 million attendees to its virtual concert starring rapper Travis Scott.[iii]
Digital leader journeys showcase steps to speed digital transformation
This year’s GXI also offers critical insight into what leading companies worldwide are doing to leverage strategic infrastructure deployment and interconnection to create business advantage. These findings are based on an analysis of over 450 Equinix customer deployments worldwide and 4,500 implementations completed between Q1 2016 and Q1 2020. The charts below show progressive enterprise interconnection and cloud and partner connectivity growth on Platform Equinix over the past four years as tracked by the GXI.
Total Number of Interconnections Organizations are Deploying
Total Number of Clouds and Partners Organizations are Connecting With
This analysis also illuminates what it takes to deploy, extend and enhance digital infrastructure to accelerate digital transformation and drive business success. Based on these insights, any business can benchmark itself to find its best digital way forward – whether that means starting the journey to a digital-ready state, or validating and confirming that the business is already on the right path to digital transformation. No matter where they are on their digital journey, the GXI reveals the exact digital initiatives and steps organizations they can take to gain the performance, scale and agility required to stay ahead.
Take a giant leap forward in your digital transformation journey
The Global Interconnection Index Volume 4 is designed to inform and inspire you as you plan, design and deploy your company’s digital infrastructure and interconnection strategy. Learning from the transformation journeys of leading digital businesses worldwide, you can benchmark your digital maturity and leap ahead to the next level of digital-readiness.
Take this critical step to gain a new powerful source of competitive advantage ̶ read the Global Interconnection Index Volume 4.
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[i] Equinix, “Global Interconnection Index Volume 4,” October 2020.
[ii] Reuters, “Zoom says it has 300 million daily meeting participants, not users,” April 30, 2020.
[iii] Forbes, “A Staggering Number Of People Saw Fortnite’s Travis Scott ‘Astronomical’ Event,” April 28, 2020.