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The Hyperscale Data Center Drives the Global Cloud Revolution

By Rich Miller - October 30, 2019 Leave a Comment

The Hyperscale Data Center Drives the Global Cloud Revolution

Edge computing provides enterprises with the option to receive real-time data insights at or near the source versus relying on the cloud to complete analysis on stored data. (Photo: Google, Google servers)

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Data is the foundation of the new economy. Almost no one is using less data today than they did yesterday, and we will all probably consume even more data tomorrow. This growing tsunami of data has to live somewhere.

hyperscale data center

Download the new Special Report. covering the growing hyperscale data center market.

That reality has fueled the rise of the hyperscale data center – a super-sized version of the mission-critical facilities that house the servers powering the Internet.  Workloads are being consolidated into larger and more efficient facilities, and it has become commonplace for hyperscale companies like Amazon Web Services, Google, Facebook, Microsoft and Apple to invest $1 billion to $3 billion in a single campus.

This trend is part of a larger densification of America’s IT infrastructure, which will include data centers in many new and unexpected places. The rise of hyperscale computing is all about businesses, and their relationships with their data and IT operations. Companies don’t want to spend millions of dollars to build and operate data centers. For most companies, it’s not their core competency.

As a result, data is flowing out of computer rooms and IT closets and into the world’s largest and most efficient data center facilities, which are designed to easily add more servers and power as they grow.

The rise of hyperscale computing has created a new paradigm in the data center business, changing the landscape for providers and customers alike. Hyperscale companies have become the largest customers for leasing wholesale and build-to-suit data center space. As a result, these customers hold huge sway over data center development, which has evolved rapidly to adapt to larger requirements. 

This digital transformation will create layers of distributed infrastructure, from the core to the edge of the network.

There are four key drivers to keep in mind that are directly influencing hyperscale growth:

  • Cloud Computing 
  • Social Media
  • Software Platforms
  • Content Delivery

Familiarizing Yourself with the Hyperscale Landscape

To fully understand the hyperscale market and its players, one has to understand that the business is made up of two tiers of companies, including:

  • Tier 1: The Mega Hyperscale Operators: Think cloud services and social media — the big guys, like Google, Microsoft, Amazon Web Services, Facebook and Apple. Deals range in size from 10 MW to 70 MW, including multiple data halls in a single building, multiple data halls across several buildings, a build-to-suit project, or even a multi-building campus.
  • Tier 2: SAAS, Platform Companies & Cloudlets: This tier includes companies like Oracle, Baidu and and China Telecom, and SaaS providers like Salesforce, SAP, Workday, Paypal, Dropbox and platform companies like Uber and Lyft. These customers are looking for just two to five megawatts at a time.

Regardless of which tier the customer falls into, they have to make the decision of whether to build or buy? A variety of factors influence the decision.

For Tier 1, hyperscale companies can either build their own data centers, lease space from wholesale data center providers, or partner with developers on build-to-suit projects. These decisions are often driven by cost and time. How quickly does the company need the capacity, and what can they afford to pay?

Tier 2 hyperscale companies, with smaller megawatt needs, prefer leasing wholesale space and working with data center developers to plan for long-term growth. Partnerships are key for these hyperscale players.

How is A Hyperscale Data Center Different?

Hyperscale data centers represent less than 10 about of data centers by number, but they are dominating new investment in infrastructure and servers. The influence of hyperscale customers and the geography of hyperscale data centers, among other factors, sets them apart in the data center community.

The latest Data Center Frontier hyperscale data center report, cites stats from Synergy Research that highlight capital expenditures by the 20 largest global hyperscale providers surged 43% in 2018 to almost $120 billion.

So what makes a hyperscale data center different?

Prior to 2016, wholesale data center leases rarely involved more than 10 megawatts of capacity. In 2018, market research from Jim Kerrigan at North American Data Centers found that were 11 deals of 10 MWs of more, including a whopping 72 MW lease in Northern Virginia. As you can imagine, these deal sizes require different approaches.

For many years, data center providers built turn-key data suites of slightly more than 1 megawatt of IT capacity and sized at about 10,000 to 12,000 square feet. Nowadays we see providers offering data halls ranging from 30,000 to 60,000 square feet.

This trend super-sizing of data halls is prompting some companies to optimize their construction process and supply chain to compete for these huge hyperscale deals.,

The design and construction of hyperscale facilities are different from traditional enterprise data center space in a number of ways, including:

  • Real estate and site selection: Hyperscale operators grow faster than enterprise companies.  This trend has been illustrated through new campuses being built by data center REITs, which are now typically designed for between 100 MW and 150 MW of capacity.
  • Power sourcing: Sustainability is key to most major hyperscale operators, and a growing number of data center providers are developing teams that specialize in navigating the complexities of the energy markets.
  • Power infrastructure: Hyperscale operators also explore innovative power infrastructure approaches, such as foregoing centralized UPS systems in favor of in-row units, to operate at lower Power Usage Effectiveness (PUE) ratings. 
  • Software-focused resiliency: Cloud computing is bringing change to how companies approach uptime, and bringing about new architectures that create more resiliency using software and network connectivity, including the use of availability zones (AZs) by cloud platforms.
  • Cooling methodology: Cooling has been the focus of optimization for the hyperscale community,  some of whom have adopted Kyoto Cooling (indirect air), membrane-based evaporative cooling (Facebook), water to the chip (Google), or rear-door chilling units (LinkedIn).
  • Data halls: Wholesale providers have shifted to larger data halls that include between 35,000 to 85,000 share feet, supporting as much as 9 megawatts of critical power.

As for the geography of hyperscale data centers, when the movement had just begun, major cloud computing campuses were often closer to the country than the city, spurring data center building booms in rural areas of Oregon, Iowa and North Carolina, for example.

“Simply put, we are on the cusp of an enormous transformation as computing resource provisioning transitions from expensive and complex to cheap and low-friction.” — Bernard Golden

But the tides are turning — as cloud growth and new workloads push data storage closer to end users. Consequently, large data centers are headed to  the suburbs of major American cities, including around “tech-centric population hubs” like Phoenix, Dallas, Chicago, Northern Virginia and similar markets.

Service Providers and Hyperscale Computing

The explosion of hyperscale computing not only has had an impact on data center customers, but data center service providers have also had to largely change the way they approach segmentation within the “service provider universe.”

Wholesale colo providers in the market for most hyperscale dealers are likely working hard on their supply changes and construction operations to deliver to new expectations on cost, speed and scale.

These are just some of the ways hyperscale customers’ demand and related trends is changing the game for service providers and developers:

  • Deal size
  • Vertical construction
  • Land banking
  • Speed-to-market
  • Deal structures

What’s Next for Hyperscale?

Data Center Frontier believe the next 10 to 15 years will be an “era of continuous advancement,” defined by two overarching themes, according to its latest research on the hyperscale market:

  • Innovation on the front end, as technology companies and service providers race to deploy and commercialize new technologies like AI, the Internet of Things, augmented reality, 5G wireless and autonomous vehicles.
  • Industrialization on the back end, as new investment streamlines the global supply chain, bringing new levels of speed and efficiency to the delivery of hyperscale capacity.

In the coming years, the edge computing market will continue to grow slowly, then accelerate; M&A activity among cloud giants and data center providers will speed up; and liquid cooling is likely to become more centrally used as a ramp up in power density requires alternative. And these are just a few examples of the changes to come.

One thing is for certain: Relationships and experience will be more important than ever in the coming years. Hyperscale operators are looking for dependability in delivery, and consistency in design and performance. For the hyperscale market, the goal is partners — not vendors.

Explore the Hyperscale Data Center Market further through Data Center Frontier’s special reports and ongoing coverage of the latest in the hyperscale data center movement, the latest of which can be explored below.

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Tagged With: cloud computing, Hyperscale, Hyperscale data center, Iron Mountain

About Rich Miller

I write about the places where the Internet lives, telling the story of data centers and the people who build them. I founded Data Center Knowledge, the data center industry's leading news site. Now I'm exploring the future of cloud computing at Data Center Frontier.

Special Report Article Series

A four-rack "pod" of Google Tensor Processing Units (TPUs) and supporting hardware inside a Google data center. (Photo: Google)

The Future of Hyperscale Computing

October 1, 2019 By Rich Miller

At Data Center Frontier, we believe the next 10 to 15 years will be an era of continuous advancement, as next-generation technologies accelerate the digitization of the global economy. Here’s our take on the road ahead for hyperscale.

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Hyperscale Computing Poised to Make Dramatic Impact on Service Providers

September 24, 2019 By Rich Miller

The growth of hyperscale computing has major  implication for data center service providers, driving segmentation within the service provider universe. This excerpt from a recent Hyperscale Data Center report highlights the implications of major growth of hyperscale computing for data service providers, as well as the future of hyperscale. 

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How Hyperscale Customers & Data Centers are Unique

September 18, 2019 By Rich Miller

A new Data Center Frontier special report explores the hyperscale data center market, and how its growth has changed how we compute. This excerpt from the report series explores the influence of hyperscale customers, the geography of hyperscale data centers — and what sets them apart.

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Who are the Data Center’s Industry’s Hyperscale Players?

September 10, 2019 By Rich Miller

A new report on Hyperscale Data Centers, courtesy of Iron Mountain Data Centers, explores how hyperscale computing has changed the supply chain for digital infrastructure, and how this computing shift will evolve. This excerpt dives into the impact of hyperscale computing.

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Enterprise and Hyperscale Requirements Have Converged

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Chris Bair, Senior Vice President of Sales and Leasing at Stream Data Centers, highlights how enterprise and hyperscale data center requirements have grown more and more similar over the past two decades. 

This finished data hall inside the QTS Data Centers Richmond campus is pre-configured for hyperscale data centers tenants, with 6 megawatts of power capacity. (Photo: Rich Miller)

Empowering Hyperscale Operators with a Collaborative Approach

December 2, 2020 By Voices of the Industry

With their focus on customized specs, hyperscale operators have “flipped the coin” on the typical supplier/customer relationship. Todd Schneider, Director of Product Management and Hyperscale Business Development at Chatsworth Products, discusses how to build collaboration among hyperscale data centers, integrators and manufacturers.

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Edge Pioneer EdgeConneX Acquired by EQT Infrastructure

August 19, 2020 By Rich Miller

EdgeConneX has agreed to be acquired by EQT Infrastructure, which says it hopes to accelerate the growth of the developer, which has been a leading player in both edge computing and hyperscale data center markets.

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Hyperscale Data Centers: A Data Center Frontier Special Report

A new special report, courtesy of Iron Mountain, explores how the hyperscale data center is reshaping the global IT landscape, shifting data from on-premises computer rooms and IT closets to massive centralized data center hubs. Workloads are consolidating in the world’s largest and most efficient facilities.

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Hyperscale Data Centers: A Data Center Frontier Special Report

A new special report, courtesy of Iron Mountain, explores how the hyperscale data center is reshaping the global IT landscape, shifting data from on-premises computer rooms and IT closets to massive centralized data center hubs. Workloads are consolidating in the world’s largest and most efficient facilities.

Get this PDF emailed to you.

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Charting the future of data centers and cloud computing. We write about what’s next for the Internet, and the innovations that will take us there. We tell the story of the digital economy through the data center facilities that power cloud computing and the people who build them. Read more ...
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