Hong Kong data centre demand will be steady in 2009

HONG KONG – Industry players don’t expect the Hong Kong server and data centre market to grow as fast as it did last year, but are still cautiously optimistic about demand in the next 12 months.

James Pang, general manager of the sales department, information system and services division at Fujitsu Hong Kong, said that while firms will delay non-strategic projects and building new frontline systems, they will continue to consolidate servers and data centres.

“Among our current active projects, most of them are related to server consolidation and virtualization,” he said. “It indicates that firms want more out of their existing infrastructure.”

IBM China/Hong Kong’s Darren Chan, manager for platform and high volume business, systems and technology group said he doesn’t worry about firms canceling their projects. “While large firms might redefine their project scope, they won’t easily cancel the ‘must-go’ ones,” said Chan.

He noted that businesses won’t scrap all their plans because of the economic gloom. “They still need new systems to give their business a boost,” said the IBM manager. But Chan’s not as positive when it comes to the SMB segment. “SMBs might postpone their tech projects [due to] customers’ delayed or canceled payments.” He added that smaller firms are likelier than large ones to drop projects because there are much fewer people involved in decision making.

Firms aren’t likely to expand their data centres in 2009, though there are some new co-location players targeting the SMBs. Fujitsu also expects the fill-up rate of its data center in Tsuen Wan to slow down. Pang said that half of its 50,000 square feet, five-story data centre facilities were already filled last year.

Chan observed that customers are still defining their next year’s priorities, but more costly moves such as data centre relocation is less likely a priority. Asked if the cheaper rent in commercial districts in Hong Kong might alleviate the data centre space shortage problem this year, Chan said the rent in business districts are still too high for data center purposes and many of the commercial buildings can’t support the power and headroom requirements needed for data center facilities.

While Sunny Lee, president of the Hong Kong Computer Society, agrees there might be a negative impact on data centre demand in the short term, he urged companies to take the shortage issue seriously because long term data centre requirements exist.

“In fact, companies’ requirements for data centre space increase during both upturn and downturn because of their needs to automate operations and comply with regulations,” Lee said.

Christina Cheung, server business group lead for the business marketing organization of Microsoft Hong Kong, said that as more enterprises will cut overall IT cost during the downturn, they might outsource their tech operations to hosting companies and as a result jack up the demand for data centre space.

Lee also believes Hong Kong is in a good position to be Asia’s data centre hub. “We have the cheapest and most reliable electricity supply and telecommunication infrastructure,” said Lee. “Besides, companies in Hong Kong enjoy freedom of technology import. Our well established IP legislation and good business ethics can contribute to the success for Hong Kong to become the data centre hub as well.”

But the government’s effort in urban planning and land-use zoning determines whether Hong Kong can become a data centre hub. “The government must resolve the zoning issue,” said Lee, “before we can attract MNCs that want to consolidate their data centres for cost savings and mainland companies that want to set up their data centres in Hong Kong for their international expansion plans.”

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