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COVID-19 to boost data centers?

COVID-19 has brought dramatic changes in every sector – including the data center sector, which has found itself in the spotlight. The sudden upsurge in remote working and government bulletins have forced it to scale up, and data center workers have been designated as key workers.

 

This turn of events has brought challenges for data center operators, including how to keep providing their service while limiting infection.

 

Before the pandemic, the success of the data center sector was largely founded on the growth of cloud technology. Global revenue from data centers in 2018 hit $38 billion and is projected to reach over $50 billion by 2023, according to Statista, as more and more businesses get on board with data analysis.

 

The virus is not expected to put too big a dent in this – companies in the data center sector have been announcing mergers and acquisition despite the crisis, as well as the construction of an entire new data center in London by Netwise.

 

However, there have been some COVID-related wobbles in the supply chain, as contractors with experience in building data centers are fairly rare and their pool of suppliers is even smaller.

 

But overall, the pandemic is expected to boost data centers’ growth. With everyone now well aware that remote working works – and many leaders aware that their business continuity plans don’t – cloud technology and related IT infrastructure are likely to sell well in the near future.

 

With some supplier businesses going under, this could lead to more supply chain struggles. Data center companies will be fighting each other for resources such as generators and transformers for these new projects, triggering a rush to get projects started before competitors.

 

US data center power company Vertiv lowered next quarter’s financial forecasts because of this impact of COVID on its supply chain – and Microsoft, HPE and Samsung all predict similar troubles with their own supply chains this year. Facebook has paused construction on a data center in Alabama over safety fears for staff during the pandemic.

 

However, there is still hope for new data center projects, as businesses like CyrusOne and Tencent have promised to donate money to fight the virus and provide support where needed.

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