Over the last 2 weeks I have been researching Edge Data Centres. I hope you find the below research useful.
Over the last 12-24 months we are seeing the Datacentre market fragment. It's predominately breaking up into "Hyperscaler Datacentres" and "Edge Datacentres". Many of you are well versed on Hyperscale Datacentres, so today I am taking the time to explain Edge Datacentres and the opportunity that lays ahead for NEXT DC in this space.
What is an Edge Datacentre
Edge datacentre's purpose is to extend the edge of the "internet". Typically when we think of the internet most of the services come from core locations like Sydney and Melbourne. There is a push by the likes of Netflix and Google (Youtube) to improve the quality of content and high bandwidth web services to end users by delivering services closer to end users. Commercially it is cheaper to deliver content closer to the users out of a Tier 2 (Brisbane, Perth and Canberra) Edge location than deliver is via a Tier 1 (Sydney & Melbourne) Core location.
Location is the differentiator for Edge datacentre. Typically there are no existing datacentres and there is an increasing bandwidth requirement.
But if you dig a little deeper it is more than just location. The edge location needs to have the following interconnects present
A good measure to determine if a datacentre is an Edge datacentre is 80% of internet content + 50% of metro users traverse the datacentre [1]. 80% of content seems like a lot but 3 companies account for 75% of internet content (Netflix, Youtube and Akami (Content Delivery Network provider)).
Are Next DC's Brisbane, Perth and Canberra Datacentres Edge worthy?
If we look at the ISP market share you will note Telstra has 41% of the market, Optus (14%), IINET (13%) and TPG (13%) as at 30th June 2016 [2].
If you go digging around the Telstra website you stumble upon a great website with an interactive map https://www.telstraglobal.com/au/company/our-network/network-map. The web page shows subsea cable connection points, Points of Presence (POP's), Infrastructure, etc...
If you filter on the "Infrastructure" checkbox you will note Telstra uses NextDC datacentre out of all 5 Next DC location. It also uses Metronode, Equinix and their own datacentres but exclusively NextDC in Brisbane and Perth. What is important to note here is Telstra is using Next DC and Metronode to deliver services in Brisbane, Canberra, Adelaide and Perth the "Edge" locations outside of the core Sydney and Melbourne locations.
Now that we have looked at ISP's (Access providers), lets explore how large content providers provide content. The content providers such as Netflix use Content Delivery Networks (CDN) to delivery hi def content to users. CDN's are used to improve performance by being closer to the end user and caching content locally [4]. A decentralized approach means its more reliable and also cheaper. Digging around on the internet there is a great youtube video [5] on how Netflix delivers content. They use something called an Open Connect Appliance and host it with the ISP to serve end users. So it is highly likely that Netflix has these appliances in NextDC Brisbane, Canberra and Perth via Telstra to services their customers.
Further evidence of content coming through NEXT DC datacentres was the announcement of CloudFlare partnering with NextDC to deliver content [6].
So what you are seeing above is NextDC datacentres is Brisbane, Canberra and likely Perth are satisfying the "Edge Datacentre" description. Please note even though Sydney and Melbourne datacentres are core hyperscaler datacentres they are providing a portion of edge functionality to the Sydney and Melbourne markets.
Next DC Hyperscaler + Edge Player
What I have found through the above research is that NextDC is not only catering to the Hyperscaler market with the likes of M2, S2, M3 and S3 it is also services Edge use cases with B1, B2, P1, P2, and C1.
I strongly believe that the acquisition of Metronode by Equinix was due to Metronode Edge data centres to complement their hyperscaler footprint in Melbourne and Sydney. In the papers [7] Equinix says that the acquisition was driven by Metronode's Perth site housing the landing station for the new Vocus Australia Singapore cable. Though this would be a key selling point I believe Edge computing via Edge Data Centres are going to play a more active role and with Next DC and Metronode with the largest edge presence they were the logical targets.
NEXT DC with its national footprint of data centres is in a strong position to capitalise on the trend of Edge services.
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