Making the Connection: Your Ecosystem Is Your Infrastructure

News about supply chain constraints and geopolitical and economic instabilities dominate the headlines. This atmosphere of uncertainty isn’t likely to change anytime soon, which is why proactively preparing for the future is now front and center for most, if not all, companies. According to the Equinix 2022 Global Tech Trends Survey, digital leaders are prioritizing initiatives that help them future-proof their business. Of the 2,900 digital leaders surveyed, 76% indicated that connecting with new digital ecosystems is a top priority in their technology strategy. 

The 2023 Global Interconnection Index (GXI) market study, published by Equinix, provides insights on companies that are successfully accelerating transformation to become digital-first businesses. One key finding is that digital leaders are leveraging ecosystems of partners on an interconnected platform to tap into new capabilities that enable them to scale. When businesses use digital infrastructure to interconnect with ecosystems, the two can become indistinguishable and can operate seamlessly.

Digital growth is global with interconnection bandwidth[1] forecasted to increase across all regions and major cities at over 35% compound annual growth rate (CAGR)[2] over the next five years according to GXI data. Ecosystem density is a catalyst for that growth, helping leaders accelerate the deployment of digital infrastructure.

The sixth annual GXI report features industry research that forecasts how companies are using interconnection bandwidth and distributed infrastructure to shape and scale the global digital economy. The number of digital leaders in our benchmark study has grown 30% over the last two years, confirming that an increasing number of businesses are turning to digital-first strategies to stay ahead.

Enterprises and Service Providers can use the GXI highlights, trends and benchmarks to: 

• Plan their regional digital infrastructure deployments and service delivery. 
• See how digital-first strategies solve for the combination of core, ecosystems and edge with an automated and flexible edge-to-cloud consumption model. 
• Get key recommendations on how to achieve a digital-first strategy. 

Ultimately, the GXI makes the case that companies’ ecosystems are now their infrastructure. By embracing the power of ecosystems, organizations are leading with a digital-first strategy. 

Digital requires Interconnection Oriented Architecture®

The GXI demonstrates how digital leaders are taking advantage of interconnection to scale their business, remove the distance between their digital infrastructure and their users, and gain a greater competitive advantage. By using a consistent pattern called Interconnection Oriented Architecture (IOA®), these businesses have been designing their digital infrastructure around points of interconnection (the direct and private traffic exchange between two or more parties) for years. This strategy has been key to their business growth as interconnection becomes the backbone of the digital economy. 

The digital infrastructure advantage and its role in a digital-first strategy

GXI 2023 illustrates how digital leaders are gaining advantage from deploying digital infrastructure by following these strategies:

Interconnecting the digital core—By distributing core infrastructure into carrier-neutral colocation facilities worldwide with a large network, cloud and IT presence, Enterprises are solving for network access and cloud adjacency as shown by the GXI finding that 60% of leaders’ locations are used to distribute their core.

Integrating digital ecosystems—By identifying new marketplaces, leveraging SaaS and integrating industry-specific services from thousands of partners, Enterprises are interconnecting, on average, with 17–94 discrete partners, depending on industry, according to GXI findings.

Interacting at the digital edge—By tapping into platform and partner capabilities to offer secure, distinct experiences globally and gain real-time intelligence in proximity to where business happens, organizations have made the edge a focus; edge infrastructure is growing 50% faster for Service Providers and 2x faster for Enterprises.

While all Enterprises are expanding their core services, the edge is where the fastest growth is happening with both Enterprises and Services Providers deploying edge infrastructure 20% faster than core infrastructure. The GXI reveals what verticals are driving this growth at the edge.

Global deployment and market research data in GXI 2023 provides a geographic breakdown of interconnection bandwidth growth and interconnection benchmark insights. Here are select highlights from the findings worldwide and by region. 

Service Provider deployments exceed Enterprise for now  

Worldwide interconnection bandwidth is forecasted to grow at a 40% five-year compound annual growth rate (CAGR).  

• Digitally mature Service Providers deploy on average 17 locations, with an average of eight core and nine edge locations. Edge locations are growing 1.5x faster than their digital core. 
• In contrast, digital Enterprise leaders deploy in 10 locations, with a 60/40 split between core and edge. Edge locations are growing 2.3x faster than core. 
• While Enterprise industries are forecast to consume 43% of interconnection bandwidth globally, they are starting to outpace Service Providers as Enterprises return to pre-pandemic growth rates.  

Enterprise deployments forecast to surpass Service Provider deployments in Americas

The Americas region continues to lead the deployment of interconnection bandwidth and is forecast to grow at a 39% CAGR through 2025.

• For the first time, Enterprise sectors are forecast to reach a higher annual deployment than Service Providers.
• Growth rates for Enterprises show they are becoming digital providers. In 2025, Banking & Insurance will deploy more interconnection bandwidth than Network Providers, while Wholesale & Retail Trade will deploy more than Content & Digital Media.
• Service Providers will consume 56% of interconnection bandwidth overall, with Network Providers called out as both the largest users and the fastest growing.

Diversity in Americas core and edge locations

The large footprint of the Network, Cloud and Financial Services ecosystems continues to drive the majority of interconnection bandwidth, with 86% of bandwidth distributed across core locations.

• New York has 35% of the forecasted interconnection bandwidth, with a focus on business and ecosystem partners; conversely, in Washington, D.C., Cloud & IT and Hyperscale Providers make up 33%, with a focus on Network Providers.
• LATAM is showing the fastest growing core and edge locations, with Sao Paulo as the fastest growing core metro at a 46% CAGR, followed by Silicon Valley and Dallas.
• Los Angeles is the largest edge metro in the Americas, with Mexico City as the fastest growing edge metro. Also, Hyperscale Providers continue to show growth across all edge locations.

EMEA is forecast to lead with digital infrastructure deployments

Europe, the Middle East and Africa (EMEA) make up 25% of the global interconnection forecast and are predicted to grow at a 40% CAGR through 2025.

• Digital infrastructure deployment across core and edge locations in EMEA is 20–30% larger than in other regions, indicating a focus on hybrid deployments to fast-track digital-first strategies.
• GXI 2023 reveals that even with two-thirds of the infrastructure distributed across core locations, growth is slightly faster than edge, showing the demand for cloud adjacent solutions.
• All EMEA Service Provider segments are growing at a consistent 36% CAGR—higher than all other regions. Network Providers continue to be the largest users of interconnection bandwidth.

Subsea landing stations and metro edge are projected to lead growth in EMEA

Core locations in EMEA are growing at 40% CAGR making up 77% of the region’s forecast. Dubai, Madrid and Barcelona are the fastest growing edge locations, with network access as the primary use case.

• The top edge locations are expanding capacity 8–10% faster than the core, with the fastest growth in metros adjacent to subsea mooring locations, such as Barcelona and Madrid, making it easier for companies to land and expand.
• Paris and London show the largest percentage of interconnection to business partners, while Amsterdam is showing significant Hyperscale Provider growth.
• Frankfurt is network dense with the most choice of network providers and partners making it one of the largest ecosystems in EMEA.

APAC shows fastest Cloud & IT and Hyperscale Provider growth

Asia-Pacific makes up 27% of the global interconnection bandwidth forecast and is predicted to grow at a 40% CAGR through 2025, as the APAC region taps into its vast ecosystem of partners to accelerate transformation.

• Cloud & IT and Hyperscale Providers are expanding interconnection bandwidth faster in APAC than in any other region, with two-thirds of infrastructure in core locations, supporting the larger population centers and denser ecosystems.
• One-third of Service Provider infrastructure is at the edge—outpacing all other regions in edge growth.
• With a forecasted 58% interconnection bandwidth CAGR, Energy & Utilities and Banking & Insurance are the fastest growing industries in APAC, and globally.

Core and edge deployments are projected to accelerate in APAC

Core locations in APAC are growing at a 39% CAGR, making up 78% of the region’s forecast.

• Due to the extremely large and dense population centers, Enterprises in APAC heavily leverage Service Providers for their digital infrastructure requirements, resulting in the smallest average infrastructure deployments.
• Edge deployments in APAC are accelerating 4x faster than digital core; Beijing is the largest edge metro with 3x the interconnection bandwidth of other edge locations.
• Shanghai is showing the fastest growth as a core metro at a 44% CAGR. A preferred market for deploying infrastructure when accessing China, Shanghai is forecast to reach 801 Tbps by 2025.

Designing for digital leadership

As part of any organization’s digital transformation initiative, infrastructure must be designed to enable the business to operate in the digital economy and participate in ecosystems.

Digital leaders should focus on doing the following:

• Develop a flexible edge strategy using a platform that extends digital infrastructure.
• Design for digital business revenue—not just digitize business as usual.
• Design for sustainability by moving to colocation and interconnecting to ecosystem partners with mutual sustainability goals.
• Evolve the core infrastructure from rigid and centralized to adaptable and distributed.
• Identify and invest in strengths, commoditizing and leveraging ecosystems for everything else.

There’s much more to discover in GXI 2023 about why your ecosystem is now your infrastructure. I invite you to read the GXI 2023 market study today.

[1] Interconnection bandwidth is a measure, calculated in bits/sec, of the capacity provisioned to privately and directly exchange traffic between two parties, inside carrier-neutral colocation data centers.

[2] Compound annual growth rate (CAGR) is a form of exponential growth, measuring a quantity over multiple years. The GXI calculates the compound annual growth rate over a five-year period. CAGR is not a linear growth rate, and takes into account the annual increased speed of growth in addition to the amount of growth.