The threat from companies such as AWS is a reality, certainly within certain target verticals. That said, there is still a future for colocation providers, but  operators need to adjust their strategies.

For example, there is always a need for data that requires low latency to the end user. Netflix closed datacenters and moved their content to AWS, but at the same time continue to run a CDN network that requires the use of colocation p in many countries.

The benefits of interconnection hubs, usually found within the colocation environment, shouldn’t be underestimated. At LCL we are an interconnection point in the Belgian market, as we have internet exchanges and many ISP’s as a customer. We connect the eyeballs of ISP’s with the content of the internet. This is of huge value to many of our customers and not something that AES is yet able to replicate.

For content providers, the cloud often is  often a good solution, but there is still the issue of security. It is unlikely that enterprises and government customers will move sensitive content and data into the cloud. In case data is hacked it will be difficult to investigate what happened, for example the Federal Crime Unit of Belgium has not the power and rights to investigate issues in other countries.

Our prediction is that worldwide, there will be  4 big cloud players. But as with any other market, there is still room for local players and these still require colocation space. These large providers will have their own data centre estate and where colocation is needed, it will be on a wholesale basis and wont include the additional services that many colocation players have build their business models on. But there is for each market also space for local public cloud players and they require datacenter space.



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