For the data center space, most of the talk over the past few years has been around how big data center buildouts are getting bigger, with most discussions around large Amazon, Facebook, Google, and Microsoft deployments. In early 2017, we heard about data center locations that would span multiple buildings with over a million of square feet in capacity. While it’s true that big data center buildouts will continue, the signs are that the growth rate of new buildouts will begin to slow. Meanwhile, an important trend that people aren’t talking as much about is the emergence micro data centers. These look likely to show significant growth over the next several years.
Micro data center is a loosely defined term, but it generally refers to a location with less than 50,000 servers. There are many reasons why customers are once again looking towards small data centers. They can range from logistical and planning reasons, such as the inability to obtain large sources of power, to geographical reasons, such as moving into smaller regions.
There is also a new type of workload that is beginning to emerge, namely low-latency workloads. While low-latency has been around a long time in the financial and high-performance compute markets, it is new in the enterprise and consumer space. The next killer app is yet to be dreamed up and will most likely take the form of IoT devices on 5G networks and augmented/virtual reality interactions to the end user. There are a whole new set of applications out there that require geographic proximity to the user/device with Pokémon Go being a good example of a consumer-facing application and a self-driving car, such as a Tesla, being a good example of a chatty IoT device requiring a lot of latency-sensitive edge cloud compute. These workloads are different from simply moving a database to the cloud, which has very little data traffic leaving a data center once the migration to the cloud is over.
Micro data centers fill the need for this new class of application by providing significant compute power in close proximity to the end user. Between now and 2020 we expect many of the large cloud providers, telco providers, and colocation providers to build a significant amount of data center capacity that is smaller in nature and closer to the user. We would not be surprised in some areas of the United States, or the world for that matter, if traditional telco providers and competing cloud providers actually use the same data center space.
Micro data centers will create additional east-west traffic as these new locations talk to each other and back to the large core mega data centers. The type of equipment connecting these devices will vary greatly. For 100Gbit/s, we see some smaller distances and locations being served by an Ethernet switch (both with pluggable optics, and with dedicated line cards), for medium distances, we see routers and optical transport gear being deployed, and for longer distances, we primarily see optical transport gear.
One of the reasons I’m so excited about this emerging trend is that all these micro data center buildouts, along with the connections between them, are greenfield in nature. Given that larger cloud providers use different equipment for different types of workloads and data centers, we anticipate that we will see a wide range of vendors and class of equipment over the next several years go into micro data centers.
At the same time, more data centers, and exploding DC-to-DC east-west traffic growth will require additional networking equipment. Some describe this as an entirely new tier in the network, others as data center interconnect, but regardless of the description, it is a new network traffic. This new traffic will help networking vendors by significantly expanding their addressable market, especially those with significant exposure to the larger cloud and telco providers. This diversity in product equipment and new emerging market segment is good for the industry. The market is in the very early stages of a new data center building boom, micro data centers will drive a new class of network traffic and provide the ability for consumers to engage with technology in new and innovating ways.