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NTT Com Rides Data Center Boom

Robert Clark
News Analysis
Robert Clark
12/10/2015
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For NTT Com, the upside of the data center business is supply that can't keep pace with demand. The downside is the harsh penalty for failure.

The Japanese telco has just completed work on the second phase of its HK$4 billion (US$516 million) prime Hong Kong data center, which now offers 7,000 racks in a site covering 70,000 square meters.

The company is on a roll, having built or acquired seven data centers this year and with four more due to open next year. Already one of the world's biggest data center operators, with 140 locations worldwide, it expects to double global capacity in the next five years.

"The market is growing much, much faster than we expected a few years ago," said Taylor Man, executive vice president of NTT Com Asia's cloud business group.

Even customers are underestimating growth, he says. In recent NTT Communications Corp. (NYSE: NTT) customer surveys on capacity expectations, around three-fifths usually make forecasts that are well below their needs.

The underlying driver is that the Internet is now central to business. But it also means bigger financial risks for providers.

"SLAs are very stringent," Man said. "It's not about what they pay you. It's about their loss. It could be a very big figure."

He cites Alibaba Group 's outage in Hong Kong in June. "What if that had happened on Singles' Day?" he asks, referring to a Chinese celebration that has also become one of the most important days for online shopping internationally.

"If you put everything online, and we go down, everyone goes down," said Man. "If you were the one who is betting everything on our data center, what would you do? I don't blame them."

To lay off some of this risk, the company is applying analytics to prevent equipment failure. "We're not doing monthly maintenance any more. We want to repair equipment before it breaks down," Man says.


For more data center-related coverage and insights, check out this dedicated content channel here on Light Reading.


The company is pooling its global network and operations data with that of some big vendors so that it can better understand usage and failure patterns, Man says. It has even filed patents on its IP.

"We have invested some significant resources but it's worth it," he says. "Just one failure is going to kill us."

NTT Com Asia primarily serves MNCs, and in Hong Kong that has historically meant global companies seeking a gateway into China. In the last two years, however, it has picked up a lot of business from the other direction -- Chinese companies wanting to go global.

"Chinese companies wanting to go global have been setting up in Hong Kong as a halfway point to the rest of the world," says Man. "Many are doing IPOs in Hong Kong or New York. Hong Kong is a very logical first step."

The market growth has ensured the ramp-up in capacity is having no impact on price. "We are still seeing demand grow faster than supply," says Man.

With this high-growth outlook, NTT Com is focused on capacity expansion. The company has acquired five data center companies since 2012 and is looking for other targets.

"We are always looking for the fastest time to market, whether its acquire, build or cooperate," he says.

— Robert Clark, contributing editor, special to Light Reading

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Ariella
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Ariella,
User Rank: Light Sabre
12/10/2015 | 9:53:09 AM
NTT Com
The American division, , NTT America announced that its partnering with HPE in a press release last week. So it is definitely in expansion mode. 
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