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Megaport Takes Aim at Direct Connect Market

Robert Clark
News Analysis
Robert Clark
11/29/2016

Asia's cloud networking market is warming up.

At the heart of it is Australia-based Megaport , which is offering enterprise customers direct connections inside the data center and a management tool shrunk to a mobile app.

It has established itself in eight facilities in Hong Kong and Singapore, and worldwide sits in more than 142 data centers -- a fourfold increase over last year. By comparison, Amazon Web Services Inc. is in just 40 centers worldwide, including a new Direct Connect location in Hong Kong announced last week. AWS's local partner HGC has also announced it is supporting Direct Connect.  

It's not a big market but it's on a sharp growth curve. Megaport CEO Denver Maddux predicts the continued shift of Asian businesses to the cloud will yield "billions and billions in revenue." Worldwide, some 50% of businesses are already using the cloud in some way and two-thirds of those are using some kind of public-private cloud.

Many of these are using Microsoft Azure or AWS to move or scale workloads, Maddux says. Megaport's pitch is that it takes a lot of the cost and headache out of connecting to public cloud infrastructure. "They're all looking for ways to slow down capital burn," he observes.

The ability to quickly order, provision and manage through a web or mobile app is one appeal, Maddux says. "There's an actual API that software developers can interact with that can control Megaport like SaaS. It allows them to write whatever software they want or to reconfigure Megaport on the fly."

Another is the flexibility of cloud infrastructure. "Most companies are terrible at forecasting their IT needs in two to three or five years," says Maddux. Likewise, when it comes to bandwidth, most SMEs have difficulty in using a full 10G pipe. Megaport's elastic networking is designed to offer them flexibility.

As with much of networking, it's a scale game. As well as establishing its own locations, Megaport has also signed partners including Digital Realty, US data center player CyrusOne and the Amsterdam Internet Exchange (AMS-IX).


The rollout of gigabit broadband access networks is spreading. Find out what's happening where in our dedicated Gigabit Cities content channel here on Light Reading.


Megaport is the latest brainchild of Bevan Slattery, who is little known outside Australia but is one of the industry's more inventive entrepreneurs. Slattery sold his first startup, metro fiber play Pipe Networks, for A$373 million ($277.6 million) six years ago and went onto create data center operator NEXTDC and metro fiber company Superloop, both of which he took public.

Megaport has also listed, raising A$31 million ($23.1 million) in its ASX IPO last November. It is still running a loss -- it reported a A$21.3 million ($15.9 million) deficit for 2015-16 -- but says it is EBITDA-positive in Australia and New Zealand.

Maddux says its focus is primarily on Asia-Pacific, and especially the dense telecom hubs of Hong Kong and Singapore.

"We're still only in four data centers [in each of those markets]. I want to get to five or six more," he says. "We've proved the model in Australia and New Zealand. I want to see Hong Kong and Singapore get to that level."

The scope is huge, he believes. "We want to be able to service any client or is thinking about using the cloud."

— Robert Clark, contributing editor, special to Light Reading

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R Clark
R Clark
11/29/2016 | 7:52:11 PM
Re: APAC cloud
Countries like Japan, SIngapore, Australia are quite sophisticated in their use of cloud though in slightly different ways. The China cloud market behind the great firewall is thriving but is very enclosed and works very differently from the rest of the world.
R Clark
R Clark
11/29/2016 | 7:52:10 PM
Re: APAC cloud
Countries like Japan, SIngapore, Australia are quite sophisticated in their use of cloud though in slightly different ways. The China cloud market behind the great firewall is thriving but is very enclosed and works very differently from the rest of the world.
Joe Stanganelli
Joe Stanganelli
11/29/2016 | 1:46:16 PM
APAC cloud
So this seems to be less about Asia itself and more about the APAC region as a whole.

Robert, how would you characterize the APAC cloud market -- with these developments -- in comparison to other major world regions right now, in terms of speed and cost of adoption?
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