The data center business has been largely unaffected by the recession and will continue to run hot for the next two years, says research firm Frost & Sullivan.

 

It predicts that the data center, co-location and managed hosting service market to continue at CAGR of 14.6% of over the period 2009-2011, with revenues topping $10.68 billion by the end of 2011.

 

Frost & Sullivan industry analyst Wu Chengyu said demand for data center hosting was running ahead of supply.

 

She said four-fifths of the major Asia-Pac data centers were operating “at close to 90% capacity,” with space at a premium.

 

The cost of power and cooling – which sometimes accounted for two-fifths of a company’s total energy consumption – and real estate made “the cost of maintaining captive data centers highly prohibitive,” she added.

 

The F&S forecast covers 14 Asia-Pac countries, which together racked up $8.0 billion in sales in 2009, up 12.8% from 2008. The biggest market far and away is Japan, which accounted for 71% of all revenue, followed by Australia, Singapore and Hong Kong.

 

Revenues are expected to rise by 14.7% this year to $9.18 billion and 16.4% in 2011.

 

Wu says growth is mostly is fueled by strong domestic demand, including government-driven investments into next-generation broadband networks, IT infrastructure build-outs and e-government. The internet media, telecom and IT industries together account for up to 45% of the demand.

 

These sectors are still growing at a fast pace in almost all countries and are expected to continue to be the biggest users of data center space over the next four to five years.

 

However, data center operators have also struggled with high costs and in particular soaring electricity bills.

 

Frost & Sullivan director Jayesh Easwaramony said power costs can often account for more than 50% of total opex.

 

Disruptive technologies were also pressuring data center operators into upgrading facilities, which was driving up energy consumption.

 

“Many data centers have been compelled to upgrade their cooling system to meet the

demand for blade servers which, while requiring less space, now also consume more energy.”