As the world grows more connected, interconnection is becoming a more important business strategy, and enterprises and service providers are accelerating their investment in network connections.
New data from Equinix says leading enterprises have expanded their digital operations more in the past five quarters than in the previous five years. The latest Global Interconnection Index (GXI) research finds that organizations are connecting to three times as many business ecosystem partners and metros.
According to GXI 2023, global interconnection bandwidth is forecast to reach 27,762 terabits per second (Tbps) by 2025, representing a five-year compound annual growth rate (CAGR) of 40%, equivalent to 110 zettabytes of data exchanged annually.
The data clearly suggests that the current supply chain constraints and geopolitical and economic instabilities are not slowing the pace of digital infrastructure investment for the most connected companies.
"It is increasingly evident that the global pandemic has been a catalyst for a fundamental shift in how customers view digital transformation and its importance as a strategic imperative," said Charles Meyers, the CEO of Equinix. "And this commitment to digital transformation continues even in the face of a broader dynamic of belt tightening, as companies look to do more with less and see digital as a catalyst to both maximize revenues and optimize costs."
Connectivity Enables Business Growth
Equinix is in a unique position to offer a global perspective on traffic exchange, as it operates more than 240 data centers in 50 cities around the world. A growing volume of this traffic will come from enterprise IT operations, who see interconnection as a key element of their digital business strategy, as they seek to manage growing data volumes and connect to more cloud platforms and business ecosystems.
As the world’s largest operator of interconnection facilities, Equinix is a logical champion for the value of interconnection. But it’s an opinion that is shared by investors and securities analysts, who increasingly see interconnection as a key competitive differentiator for colocation providers.
Colocation facilities provide a central meeting place for networks, clouds and enterprises to host their physical infrastructure and interconnection enables them to efficiently exchange traffic with one another. leading players. Equinix leads the pack with more than 428,000 interconnections, but it has lots of company among colo providers beefing up their interconnection business.
That includes Digital Realty, the second-largest player in interconnection, which is partnering with network specialist Zayo on its interconnection strategy. Digital Realty believes data center geography will be guided by massive aggregation points for data, which create “data gravity” that attracts applications, services and infrastructure. In a world defined by data gravity, there will soon be too much data to manage through the current centralized system.
Other leading players in interconnection include Cologix, American Tower's CoreSite operation, and DE-CIX. There's also a large group of colo providers investing in growing their interconnection strategies, including DataBank, Cyxtera, QTS Data Centers, Iron Mountain and Flexential, among others.
An example of that investment is yesterday's opening of a new DE-CIX interconnection hub at a QTS Data Centers campus in Richmond,
"DE-CIX Richmond is key to creating more distributed and diverse ecosystems on the East Coast, bringing connectivity solutions into the closest proximity of businesses and users," said Ivo Ivanov, CEO of DE-CIX, which 96.2 Terabits (Tbits) of network traffic in 2021, reflecting the insatiable demand for data traffic exchange. "We are passionate about bringing data and interconnection services closer to the users, and now DE-CIX North America spans from east to west, with more on the way.”
An Ever-Connected World
Equinix expects interconnection bandwidth to continue growing at over 35% CAGR across all regions and major metros through 2025.
"In today's dynamic setting, every business is becoming a digital provider, which requires a new type of digital infrastructure built sustainably around leveraging ecosystems to deliver seamless digital experiences," said Steve Madden, Vice President of Digital Transformation & Segmentation at Equinix. "Those with a digital-first strategy in place, investing in a robust, future-looking business model and interconnecting to rich ecosystems, are prepared to scale, adapt and thrive,"
The GXI also projects that 90% of Fortune 500 companies will become digital providers, both selling and consuming digital services by 2025. That aligns with the view of leading research firms.
As companies increasingly adopt digital-first strategies and look for new ways to drive differentiation, the ecosystem plays an even more critical role. Organizations are relying on ecosystems and digital infrastructure as the foundation to sustainably scale and deliver business value," said Steve White, Program Vice President, Channels & Alliances, IDC. "In order to achieve these business outcomes, companies are interconnecting to customers, partners and vendors to accelerate collaboration and co-creation, as well as meet sustainability commitments."
