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Structure Research on Tokyo colocation market

  • August 31, 2018

Source: Data Economy

Tokyo Olympics Will Help Create International Colocation Market Worth $2.3bn

Japan’s capital already has almost 110 unique data centre colocation facilities, and the upgaming games will help drive further entrants into the lucrative market to challenge the existing local behemoths.

The Tokyo colocation market is expected to be worth $2.3bn by 2023, enjoying a five-year CAGR of 6.5% for the period 2018-2023, according to data from Structure Research. The market will grow by 7.3% in 2018 from 2017’s market figure of $1.6bn.

Retail colocation is projected to account for 79% of the total revenue generated in 2018, with wholesale colocation taking up the remaining 21%. But wholesale growth is forecast to outpace retail colocation growth over the next five years, said Structure Research.

There are 109 unique data centre colocation facilities in the Tokyo Metro area, being the obvious primary hub for international firms wanting to access the Japan market. This busy market was helped by Japan’s geographical location as the most prominent technology market on the northwestern part of Asia, resulting it becoming the main landing point for a sizeable number of submarine cables to connect western parts of the US to the rest of Asia.

“The Tokyo Metro data centre market has historically been controlled by domestic providers, though recent M&A and expansion activity from Equinix, MC Digital Realty and Colt DCS has shifted this dynamic,” Structure Research said.

It said the upcoming Tokyo Olympics in 2020 should help to “accelerate” Tokyo’s transition into becoming more of an international hub for cloud and IT infrastructure.

Japan’s NTT Communications is the market leader in Tokyo from a data centre rack capacity standpoint, with over 32,000 racks or the equivalent of 114MW of critical IT load capacity across 25 data centres. But Equinix is the colocation market leader for revenue generation [see table above], with 15% of Tokyo market share.

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