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20 November 2018, Copenhagen

Datacloud Nordic 2018

There’s a Great Deal Going On

Thought Leadership and Insight from Hydro66

Fredrik Kallioniemi

For this edition of the Series, we spoke to Fredrik Kallioniemi, Commercial Director at Hydro66.

1. What are the key factors making the Nordics an ideal location for data centre builds?

The key benefits of the Nordics are well known now - a highly educated workforce with deep IT skills and an innovation culture. Massive quantities of true green power delivered over ultra-reliable giga-scale utility networks at the lowest price in the EU. Fiber networks that can handle unlimited hyperscale traffic. On a more macro level, the Nordics are geo-politically stable and don’t suffer from extreme weather. We are in awe of the lengths our peers in some parts of the world have to go to maintaining data center availability during horrendous weather events, such as during the recent hurricane season in the US.

The more interesting question is how long it will take the mainstream data center operators to recognise the superior economics at scale only the Nordics offers. The Internet hyperscale self-builders have blazed the trail, so who will be the first large colocation DC to commit to the Nordics beyond serving the domestic markets? For example, I believe Hydro66 have made a clear case for locating in Sweden and we look forward to other operators joining us.

Hydro66’ main objective is to help reduce carbon emissions from the Internet and data centers, and that means direct-connected sources of new renewable energy, such as local hydropower. Hydro66 is a beacon to the industry, proving that a low cost hyper scale model really works in non-traditional locations and our current 3x build program proves there is customer demand.

2. How do you see the advent of edge data centres impacting hosting infrastructure?

Time will tell, but for now it seems that edge is here to stay. It forms a piece of the puzzle for cost-constrained ISP’s to get ever-increasing volumes of traffic closer to consumers in a more cost-effective way. As these operators seek savings elsewhere, their attention will inevitably turn to more economical scale data center solutions. And there are a lot of signals from the marketplace that telcos are looking to re-engineer their data center estates, consolidating the core assets and looking to save money in the regions. For example by considering non-traditional locations. Hydro66, are very well placed to help carriers and telcos with wholesale data center capacity at scale and at approximately 50% of the equivalent legacy data center market cost

3. What trends do you see as pivotal for the growth of collocation throughout Europe?

Assuming we accept data is expanding at ~20% per annum as a market-driven baseline, the real question is what will drive growth above this rate. It’s becoming increasingly clear that new on-premise data center solutions are no longer cost-effective for all but the largest corporates. And so enterprise demand will continue for colocation operators. It’s well known that the hyperscale self-builders cannot self-build fast enough, so they will continue as a growth driver as their inter-competition continues to play out. In some cases their competition extends to land-grabbing available data center space! This extends to out-of-region actors coming into Europe - we see the interest from the Far East for a few years now. As an additional variable in this dynamic environment we see some fairly aggressive M&A activity at interesting revenue multiples - the quest for growth at all costs. And of course there are huge economies of scale for certain use cases eg HPC which are becoming increasingly affordable to deploy.

4. How do you see China’s One Belt One Road initiative influencing the market in the Nordics and further afield?

The Nordics, and Sweden in particular, are well placed geographically on the East-West corridor, and perhaps we will soon see new submarine fibre routes ‘over the top’ for example Arctic Connect. And it’s without doubt that large Chinese enterprises have turned their attention towards Europe. For example Huawei and China Telecom Global are actively present in the Nordics. They are both aggressively pursuing high value corporate business via partners and also directly. So incumbents in the service provider and hardware space need to be on their game to remain competitive and relevant.

As a fundamentally disruptive new market entrant Hydro66 are actively supporting initiatives and business models to drive all inefficiencies out of the market, and our ongoing dialogues with Chinese partners is proof to that.

On the 30th of October, Hydro66 will be at Datacloud Nordic 2017 in Oslo. Meet them there!