If mines, mills and factories were the powerhouses of the 20th Century, then data centres are today's equivalent. You've seen them on the fringe of most decent-sized cities, massive great sheds that loom large like mountains of brick and glass. Whizzing and whirling away inside are the computer brains that drive the modern economy, housing detailed information on everything from financial records, digitised legal papers, birth, death and marriage details, even this very article you're reading right now. It's called being in 'the cloud'.
In today's new issue of Shares (here) I look at the wonderful world of Big Data, what it is, its opportunities and challenges, and how this compares to your piddling computer hard drive at home (see infographic below). Data centres are where most of that digital info lives, allowing analytical access and the click of a mouse, touch of a screen or, coming soon, the wave of a hand.
This week the quarterly CBRE European data centre survey was published for the first quarter of 2013, illustrating an industry in rude health. Demand growth of 6% year-on-year compares to supply rising at 8%, thanks in the main to new space coming onstream in Frankfurt, Germany, and London. In power terms, demand and supply both grew 15% year-on-year, with the amount of power capacity coming onstream still ahead of demand, but at a slower rate than in 2012. CBRE retain their forecast of 44MW (megawatts) of power coming onstream in 2013 compared to the 106MW flush through last year 2012.
This apparent imbalance should be a boon for data centre operators, such as Telecity (TCY), Europe's biggest co-location shed manager, protecting pricing after a huge 2012. Overall, the survey suggests mid-teens growth rates and sustained pricing remain reasonable expectations for tier 1 data centre providers, which plays well for the industry as a whole. This implies there is plenty of growth headroom for the multitude of operators to co-exist, with the likes of Equinix (EQIX:NDQ), Interxion (INXN:NYSE) able to prosper alongside Telecity, and not have to fight it tooth and nail.
Perhaps the real value for investors exists in the managed data centre supplier space, those expert businesses that not only house a client's data, but also run their IT systems in a unified 'stack'. This space is dominated by US giant Rackspace (RAX:NYSE), but let's not forget the UK's own Iomart (IOM:AIM), perhaps one of Aim's most reliable growth companies today, and which reported impressively robust organic and acquisitive growth last week (here). And into this sea of opportunity new entrants are emerging, such as Daily Internet (DAIP:AIM), and company I also wrote about in the new issue of Shares (here).