2018: Five Predictions Equinix Sees Coming In South Asia

The year 2017 has seen a lot of changes in technology. As the interconnection junction between network providers, cloud providers and the enterprise, we are at a unique place where we get access to what is trending with our customers in South Asia.

This all gives us uncommon industry insight and helps inform our annual predictions.

Here’s what we see coming in 2018:

#1 Private blockchain networks take hold and multiply

There has been a lot of buzz about blockchain in the past year. While blockchain has been largely associated with Bitcoin, it is in fact so much more than the technology used for cryptocurrencies. The public blockchain at the heart of various cryptocurrencies is vastly different from the private blockchain we see appealing to more companies in 2018. The key difference is that private blockchain networks have more secure digital identity management, greater levels of trust and the ability to permit far greater levels of transactional throughput.

With the rising startup scene in Asia, we are likely to see entrepreneurs leveraging blockchain technology to build bigger apps more efficiently. Organizations that provide blockchain networks for various business verticals will need to host blockchain ledger nodes in multiple distributed locations to ensure low latency. Enterprises in some private blockchain networks will also need to simultaneously learn about the completion of time-sensitive blockchain transactions.

As enterprises start to be involved in multiple blockchain networks (e.g. supply chain, finance, etc.), they will want their business systems to be located close to these different blockchain network nodes. The high network and cloud provider density within Equinix’s ecosystem attracts both the blockchain network providers and the enterprises to create a synergistic blockchain ecosystem.

#2 Artificial Intelligence-based applications take flight and become mainstream

Even though Artificial Intelligence (AI) technology existed many years ago, it is only starting to become a highly valued approach today as more businesses involve AI in their decision-making processes.

According to an IDC report, Asia Pacific (excluding Japan) spending on cognitive and AI systems is forecasted to reach USD4.6 billion in 2021, with the banking and healthcare industries having the highest spending in 2017[1].  Based on this, we see AI making even deeper inroads into the mainstream in 2018.

This is evident in the case of Singapore, where Marvelstone Group, the private investment firm behind Singapore-based fintech hub LATTICE80, announced its plans to launch the world’s largest AI hub in Singapore in 2018.[2] In line with Singapore’s smart nation initiative, this AI hub aims to serve the existing needs within the country and position Singapore as a global leader in AI technologies.

With the right resources within the region, we are expecting to see new startups that focus on AI to power the next generation of applications. AI systems require data from multiple sources and they need to be distributed with model building happening in clouds and model deployment based at edge locations to satisfy real-time processing requirements.

As regulatory bodies are ensuring AI apps comply with security and data residency laws, Equinix’s global footprint enables distributed core-edge AI deployments, which makes it easier to keep data within regional boundaries. We are also well suited to create ecosystems of different types of data brokers relevant to AI providers.

#3 Data Transmission to increase within the region as new architecture for subsea cable systems becomes prominent

Submarine cable systems have long been essential to the Internet, given that about more than 90 per cent of all Internet traffic touches one. However, the combination of dominant tech trends and Internet demographics have amped up data traffic to new levels. The exponential data traffic growth is driving unprecedented demand for subsea cables, and according to TeleGeography, subsea cable construction costs in Asia is expected to almost double between 2017-2018 and 2015-2016.[3] During this building boom, we see a new architecture taking hold that will improve costs, deployment agility and interconnection benefits.

Advances in laser technology have enabled subsea cables to bypass cable-landing stations on the beach and directly land in retail multi-tenant data centers, like those Equinix operates. This means customers of subsea systems that land inside Equinix data centers that support this model get direct, low-latency access to the numerous industry ecosystems we host. This thus increases a subsea cable system’s appeal to its potential customers.

In September 2017, Equinix announced that it would provide connectivity to the Australian-Singapore Cable (ASC) submarine cable system in Melbourne and Sydney, and enable high-speed connectivity across Asia Pacific. Along with the Malaysia-Cambodia-Thailand (MCT) cable system, we are expecting to see massive traffic data traffic within the Indo-China region. As demand for data capacity in the region increases rapidly, Singapore will become a popular choice for companies looking for a hub as their base for future expansion within Southeast Asia. This outlook is aligned with the Global Interconnection Index, published by Equinix where Singapore is expected to have the largest interconnected bandwidth capacity of 256 Tbps in the Asia Pacific region by 2020.

#4 Companies look for a global data center platform to meet emerging data sovereignty and auditing mandates

 Several major data privacy, security and sovereignty regulations will be enacted in 2018, and all these will have major implications for businesses. For instance, in May next year, we will see the General Data Protection Regulation (GDPR) come into force in the European Union (EU). The GDPR restricts data transfer in the EU to countries that are GDPR-compliant, which could affect transfers between EU companies and important international business partners, including those based in Asia.

Within Asia, we are also expecting to see an increase in data protection laws and regulations by government bodies. In Indonesia’s banking industry, laws stipulate that customer data of Indonesian banks must be stored domestically by October 2017.[4] The recent launch of their national payment gateway by Bank Indonesia further aims to improve consumer protection by securing customer transaction data in every transaction[5]. In the Philippines, security and privacy protections were strengthened through the establishment of the National Privacy Commission.

With heightened enforcement of data sovereignty regulations in Asia, it becomes necessary for organizations to have data centers in multiple regions in order to store data locally. Equinix’s global data center footprint helps satisfy data residency requirements and provides consistent clock services across locations worldwide. In other words, emerging markets are going to be as important as the role of a network hub.

#5 More new players will bring better consolidation in the data center services market

The lucrative prospects of data centers are increasingly attracting new players in Asia. Come 2018, we are expecting to see more new entrants in the market, and existing enterprises growing bigger as people become more connected in the region.

With that, it will come as no surprise when enterprises start to consolidate. With Equinix, we have acquired 29 data centers from Verizon this year. Last year, it was also announced that Mediacorp, the broadcaster owned by Singapore state investment firm Temasek Holdings, is considering a sale of its data center unit 1-Net.

The need for interconnectivity will impact the surge in the amount of data generated, consumed, transferred, and stored. In order to stand out from the crowd, enterprises need to have successfully expanded their global digital footprint, and build their digital infrastructure so that it can scale to match their opportunities.

^[1] “IDC Spending Guide Forecasts Asia Pacific (excluding Japan) Spending on Cognitive and Artificial Intelligence Systems to Reach $4.6 Billion in 2021”, October 2017

[2] http://www.straitstimes.com/business/companies-markets/marvelstone-to-launch-worlds-largest-ai-hub-in-singapore-next-year

[3] https://www2.telegeography.com/new-submarine-cable-builds

[4] https://www.pwc.com/sg/en/publications/assets/surfing-the-data-wave.pdf

[5] https://e27.co/bank-indonesia-officiates-national-payment-gateway-20171205/