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Data centre pricing is evolving with new cloud fabric services

Data centre

Data centre pricing is changing as providers respond to new challenges including the migration to cloud services.

Cloud service providers (CSPs) are a significant user of colocation capacity, accounting for 30 per cent of revenues, according to a new DCP report. Retail data centres are offering both colocation services and access to the cloud as part of a hybrid cloud solution but local data centres without cloud access face an uncertain future.

Wholesale data centre capacity is growing rapidly worldwide, driven by CSPs and hyperscale users, as cloud providers expand their services into new markets.

Data centre rentals are increasing as new high specification facilities are launched. The construction cost of new facilities is increasing. Additionally, data centre providers are introducing a CPI (Consumer Price Index) factor into their end-user pricing to cover inflation and protect their margins.

Power costs are increasing and data centre providers are passing on the increase to their users with utility costs increasing by as much as 80 per cent in Europe over the last six months.

Providers are seeking to diversify their business by introducing new connectivity services. These include cloud fabric services, which provide access to a number of cloud providers using a virtualised online portal, metro connectivity services and IXP (Internet Exchange) services to connect to a range of ISPs.

Data centres are investing in online portals and DCIM (Data Centre Investment Management) for service automation, in order to provide near real-time information, on current server utilisation and power usage. They are also set to introduce predictive analytics using machine learning and AI to forecast future usage.

Despite investment in new technology and connectivity services the majority of data centre provider revenues are derived from colocation services. And the rentals of data centres remain focused on dedicated cabinets or racks using long-term contracts and so are different from the virtualised on-demand services used by the CSP.

Rack space rentals are increasing but there remains a wide range of average rack space pricing worldwide with considerable differences between regions. Average data centre rentals in the most mature markets such as Europe and North America are considerably lower than the newer markets in the Asia Pacific and South America regions where rentals remain much higher.

Pricing is typically composed of a core rental for rack space plus a rental for the ‘right’ to use an amount of power plus a usage charge per kWH (kilo-watt hour) which varies according to usage. Capacity continues to increase, particularly in Tier 2 markets where cloud operators are introducing services (in countries such as South Africa and Mexico) and is driving ecosystems in those regions, according to the DCP Future of Data Centre Pricing report.

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