June 03, 2013, 12:25 PM — As competition in the cloud computing market intensifies, some of the biggest players are looking beyond their domestic borders to gain an international advantage.
Just this week Savvis, which is owned by telecommunications provider CenturyLink, announced 85,000 square feet of new data center space across 10 locations around the world, including two brand new data centers opening in London and Hong Kong, bringing the company's global footprint to 2.4 million square feet across 50 centers.
Microsoft, a sneakily robust vendor in the cloud market, announced this month the expansion of its services across Japan, opening two data centers in the region. Amazon Web Services, Rackspace, Google, IBM and others each have had their own announcements during the past half-year expanding their data center footprints not just in the U.S., but with a particular focus on emerging international markets.
"To date, the U.S. is an early adopter of public cloud computing, and is generating significant revenue for U.S.-focused vendors," says Jillian Mirandi, an analyst at Technology Business Research. "Now that public cloud computing is maturing, customers are seeking cloud on a more global level and vendors are looking to monetize this demand."
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The focus on building out data centers in international locales is being fueled not only by vendors looking to out-gun each other, but also because of customer demand in these regions. In emerging markets, the economics of using cloud computing resources can be attractive for startups because it requires much less investment in upfront capital expenses.Data privacy rules and regulations are playing a role here too though, Mirandi points out. Many countries have data privacy laws that require certain types of information to be given safe harbor within that country's domestic borders. Australia, for example, has seen investments by a handful of providers opening up data center space there, both as a launching point to service the Asia Pacific region, but also to comply with laws to store data on the island nation.
Amazon and Rackspace have specifically expanded in Australia recently, for example. Fujitsu recently signed an agreement with a university in Singapore to create a healthcare cloud in the country.
Other cloud providers are expanding their operations in European markets to serve companies operating in the countries because they may be reluctant to store sensitive information in the U.S. due to government surveillance and data peeping concerns, particularly from the USA PATRIOT Act. "Though Europe faces macroeconomic headwinds, many cloud vendors are still expanding onshore services (there)," Mirandi wrote in an e-mail, citing Google, Rackspace, Salesforce.com and Savvis as companies that have expanded recently in Europe.
Emerging markets in South and Latin America serve as another hot area of investment. Verizon Terremark, Google, Amazon, Fujitsu, and IBM are all developing data centers in the Latin American region, attempting to capture new businesses sprouting up in the region.
So what does all this positioning of data centers around the globe by vendors mean for end user customers? For one, providers with a broad international footprint allow customers to host data in whatever part of the world is best for them. Some companies want to store data as close to their end users as possible to reduce latency, others may be concerned about data privacy issues. It can also be easier to share data within a certain provider's network compared to using services from multiple providers across countries. Amazon Web Services, seen by many as the leader in the infrastructure-as-a-service market, has eight separate regions of operation, including three in the U.S., plus Ireland, Singapore, Tokyo, Sydney and Sao Paulo, plus a ninth government cloud region.