6 Data Center Trends Shaping the Future of the Industry

Demand for data center capacity has skyrocketed over the past three years as organizations have digitalized their processes to enable remote work models, increase efficiency and gain competitive advantage. That demand shows no signs of abating — according to a recent DataCenterHawk report, North American data center vacancy averages just 4.4 percent. 

Data center operators are building out new capacity and looking for ways to streamline construction to meet this demand. At the same time, operators are grappling with supply chain constraints, sustainability mandates, and other challenges.

But these aren’t the only factors impacting data centers. Here are six key trends that are shaping the industry today.

1. Data Consumption and Power Densities Are Increasing Rapidly

Cryptocurrency has long been the industry’s power hog, with Bitcoin alone consuming an estimated 127 terawatts-hours annually. However, artificial intelligence (AI) uses even more electricity because it is computationally intensive — training the GPT-3 neural network required 1.2887 gigawatt-hours. Given the increasing popularity of chatbots, AI art generators, and similar applications, AI will soon overtake cryptocurrency in terms of energy consumption. Couple that with the rapid development and adoption of Internet of Things devices, the 4th industrial revolution, the anything-as-a-service software industry, and the natural progression of existing technologies, and it’s no wonder 90% of the world’s data was created in the last two years. Data centers must constantly plan, provision, and prepare to ensure they have adequate power capacity to handle the influx of data.

2. Connectivity Demands Are Driving Faster Networks

Consumers expect instant access to large amounts of data and connectivity for growing numbers of devices. The average U.S. household now has 22 connected devices, according to a recent report from Deloitte. The growth of the Internet of Things (IoT), Industrial Internet of Things (IIoT), 5G cellular networks, and edge computing also drive the need for faster networks. As a result, many data centers are implementing fiber-optic cabling and migrating from 40 Gigabit Ethernet to 100G to 400G and beyond. Data center providers that effectively upgrade their networks will capture the market opportunity presented by all this new technology, while those that don’t risk falling behind.

3. Tier 2 Markets Are Growing

Energy cost and availability, environmental factors, tax incentives, and the political climate are forcing data center operators to explore new markets. Edge initiatives and data residency regulations are also driving growth in Tier 2 data center markets in the US and abroad. New facilities are being built in submarkets surrounding existing data center hubs, and major projects are slated for areas with sufficient land and power. 

Northern Virginia offers a prime example. Loudoun County, outside Washington, D.C., has had a data center under construction at all times for the past 13 years. Despite concerns from Dominion Energy about meeting power demands in the area, there’s no end in sight. At the same time, expect to see growth in less developed data center markets such as Denver, CO, Salt Lake City, UT, Hillsboro, WA, and Atlanta, GA. Across the pond, new high-capacity cables from the Middle East, North Africa, and the Americas are empowering cities such as Madrid, Rome, Zurich, Warsaw, and more to grow their data center industries. These cities will continue to close the gap with FLAP (Frankfurt, London, Amsterdam, and Paris) in 2023. On top of that, data sovereignty regulations increasingly require data to be stored locally, furthering the development of tier 2 data center markets overseas.

4. Decentralization Is Empowering Colocation, Edge, and Hyperscale Growth

The data center industry is in the midst of a trend toward decentralization. Companies are moving away from exclusively using on-site enterprise data centers towards a variety of different types of data centers. The hybrid cloud concept is increasing in popularity and adoption. Companies are utilizing a mix of public and private clouds and on-premise, edge, and colocation data centers. This model helps alleviate traditional constraints, maximize availability, and adapt to rapidly evolving economic, environmental, and technological market conditions.

Colocation has become an increasingly attractive option for organizations needing greater data center capacity and more flexibility to scale, driving steady demand for colocation capacity. 

Edge computing is also seeing dramatic growth — Gartner has predicted 75 percent of enterprise data will be generated and processed at the network edge by 2025. Edge computing is no longer a luxury; it’s a necessity. As IoT and AI/ML technology advances and consumer expectations for instantaneous access to the associated information and functionality grows, companies must adopt various types of edge computing frameworks and invest in new technologies, such as micro data centers for edge computing.

As cloud services and cloud adoption grow, so too do hyperscale data centers. Despite the recent rash of layoffs, Amazon, Google, and Microsoft are only getting bigger, as are their numerous hyperscale data centers. According to Synergy Research, spending on hyperscale data centers has increased 20 percent annually since 2016. It now accounts for 29 percent of all data center infrastructure spending, with Amazon, Microsoft, and Google accounting for more than half of the world’s hyperscale data centers.

5. The Need for Sustainability Is Fueling Innovation

The data center industry is faced with unprecedented energy and power challenges. Major energy utilities like Dominion Energy in Northern Virginia are concerned that they can’t keep up with ever-growing power demands. Aside from that, an increasing amount of scrutiny is being placed on where the power data centers use is coming from. Given the known fact that data centers produce 2% of the world’s carbon emissions and the recent news that Google data centers use 4.3 billion gallons of water a year, the onus is on major data center providers and operators to explore cleaner energy sources. 

Most major companies have agreed to work towards a goal of net zero carbon emissions by 2050 (or sooner). They’re doing so by looking at renewable energy and alternative resources such as hydrogen and nuclear power to support increasing power loads. In fact, Google, Microsoft, Meta, and Amazon are the four biggest buyers of corporate renewable power purchase agreements already. 

Companies are also experimenting with microgrids and onsite power generation to ease the burden on the electricity infrastructure. The development of faster and more powerful chipsets that produce a significant amount of heat is driving the adoption of more liquid, immersion, and direct-to-chip cooling technologies to dissipate the heat load efficiently.

6. Adaptability Is a Must

As with life, change is the only constant in the data center industry. Data center operators must adapt their facilities and business models to weather these disruptive forces. Perhaps the most omnipresent example of this is in the global supply chain. Data center providers and operators can’t afford to sit idly by and wait for critical infrastructure to arrive when it arrives. Even today, traditionally sourced generators, enclosures, and UPS containers can take 50+ weeks to procure. Businesses must plan ahead, explore alternative (often local) suppliers, and increase the stock of needed materials. 

Operators must also look for new solutions that can help them accommodate increasing power densities, network demands, weight loads, cooling requirements, and sustainability goals. And if this dynamic weren’t enough, they must remain aware of revolutionary technologies such as quantum computing and AI/ML that promise to further transform the industry, with some predicting the impact as significant as that of the Netscape browser or the rise of mobile devices. From bits to qubits and CPUs to GPUs, modern technology is advancing faster than ever. One thing remains certain, those that adapt will succeed. 

Introducing the InfiniRack from Enconnex

Enconnex offers an array of data center products, equipment, and solutions for sale to help you prepare for these key trends. Our new InfiniRack is an innovative data center cabinet configured to order and shipped fully assembled. We call it the InfiniRack because the customization options are virtually limitless, enabling seamless deployment no matter the use case or scale. Contact one of our data center infrastructure specialists to learn more.