Emerging hybrid scenarios, coupled with changes in demand brought on by COVID-19, create opportunities for colocation vendors

While slowing to single-digit growth, down from 10.6% in 2Q19, the colocation market continues to expand as colocation vendors address the shifting needs of enterprise and hyperscale vendors. According to TBR estimates, benchmarked vendors’ average data center services and colocation revenue increased 8.1% year-to-year in 4Q19 to an aggregate of $3.4 billion. Moving forward, TBR expects incumbents and smaller players alike to continue driving expansion initiatives, particularly in the U.S. Even Japan-based NTT Communications is moving its overseas subsidiaries to become part of NTT Ltd. to better capitalize on market opportunity abroad.

Colocation has long been an option for the data center space, but the market is taking on greater importance amid recent IT trends. Rising demand for cloud environments, specifically hybrid models, pushes leading hyperscalers and the modern enterprise to seek out co-located facilities and the managed services vendors have to offer. TBR’s Colocation Benchmark covers the financial performance of leading providers in this space and tracks their business strategies across core colocation markets and for complementary data center services.

Quick Quantum Quips: Integrations and abstractions quicken quantum readiness

Welcome to TBR’s monthly newsletter on the quantum computing market: Quick Quantum Quips (Q3). The overall activity around quantum computing has been accelerating as more pieces of the quantum ecosystem inch closer to commercial readiness.

For more details, reach out to Geoff Woollacott or Stephanie Long to set up a time to chat.

May 2020 Developments

Selecting five key announcements becomes more challenging as quantum activity begins gaining market momentum. The highlighted excerpts illustrate the growing visibility quantum has among governments, venture capitalists, and a variety of researchers seeking to gain familiarity with the technology for application discovery. That said, TBR recently conducted interviews for next month’s Quantum Computing Market Landscape, which will focus on professional services, and found respondents from services firms are less optimistic about economic advantage being achieved within the next year but believe large enterprises need to be experimenting with quantum tool sets now for application discovery to capitalize on the technology when it achieves economic advantage. Similarly, governments are backing different entities to ensure their nation states have competencies in quantum technology as a way to protect their economies and increase national security.

  1. Congress had a bill introduced by Republican Rep. Morgan Griffith, R-Va., called the Advancing Quantum Computing Act, that would mandate the Department of Commerce and other relevant agencies conduct four different studies on quantum computing to assess the technology’s impact on U.S. commerce and society. Within two years of the bill’s passage, the Department of Commerce and other relevant agencies are to conduct studies that 1) rank industries and the extent to which they are leaning into quantum, 2) calibrate all federal interagency activities related to quantum, including agencies with regulatory oversight of private sector quantum activity, 3) rank the activities of at least 10 and not more than 15 different countries, including how these country activities compare to U.S. quantum market maturity, and 4) focus on the quantum ecosystem supply chain to assess the current, emerging and long-term risks. The Department of Commerce would then have six months to share its findings with the House Energy and Commerce and Senate Commerce, Science and Transportation committees. While it is a well-intentioned bill, TBR questions the lengthy timeline for enactment of these studies, believing the quantum market will evolve rapidly and that six-month-old market information could be dated when addressed by the relevant agencies.
  2. Australia aims to grow its domestic quantum computing capabilities through a working partnership between the Pawsey Supercomputing Centre and Quantum Brilliance intended to begin implementing the recommendations of Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s national science agency. Quantum Brilliance is using diamond to develop quantum computers that operate at room temperature without the need for cryogenics or complex infrastructure. Quantum Brilliance CEO Andrew Horsley makes the bold claim: “Diamond means that instead of filling up a room with cryogenics, you can hold a quantum computing in your hand.” Quantum Brilliance machines will be on-site at the Pawsey Supercomputing Centre and will be available to “anyone, anywhere” interested in working on quantum engineering.
  3. Entropica, a Singapore-based quantum computing software startup, raised S$2.6 million in seed funding led by tech investor Elev8. U.S.-based Rigetti Computing also participated in the round. Entropica’s co-founders Tommaso Demarie and Ewan Munro previously worked at Singapore’s Centre for Quantum Technologies before starting Entropic in May 2018. Entropica is another entrant aiming to build the integration layer between classical and quantum computing that is vital to broader commercial adoption of the technology. In addition to Rigetti, Entropica cites collaborating with quantum systems manufacturers IBM and Microsoft.
  4. QuTech and Intel released a paper on their work to develop a faster turnaround testing and validation of quantum materials and devices. The approach reduces the complexity of cryogenic components by allowing them to be readily integrated in any type of cryostat. The researchers claim the approach increases the number of wires that can operate at cryogenic temperatures in the cryostat by an order of magnitude. This discovery mitigates a current input/output bottleneck based on the current limitations of the number of wires operating at cryogenic temperatures. The cryogenic multiplexer platform is based on common CMOS componentry and has the potential to reduce the form factor of existing superconducting systems. QuTech is a collaboration between TU Delft and TNO.
  5. IBM announced enhancements to its Qiskit Quantum Algorithms and Applications (QA&A) toolset. First, IBM announced a circuit library consisting of feature-rich circuits suited for practical applications or for complex theoretic properties; second, IBM introduced the Optimization module, which is a library for researchers and beginners to engage in development and experimentation in quantum combinatorial optimization; and third, IBM rebuilt Qiskit’s core algorithmic tools to optimize them for research and prototyping. The Qiskit enhancements have also been fashioned to address users with eight different backgrounds from beginners to experienced quantum information theorists as well as software engineers, quantum chemists, optimization researchers, finance researchers, physics researchers, and machine learning researchers.

If you would like more detailed information around the quantum computing market, please inquire about TBR’s Quantum Computing Market Landscape, a semiannual deep dive into the quantum computing market. Our latest version published in December. The next iteration, scheduled to publish in June, will focus on the quantum-related professional services being deployed to increase business awareness and technical skills that will be in short supply once quantum’s economic advantage becomes reality.

And, lastly, on behalf of the entire TBR team, we hope you stay healthy and safe in these unique times.

Total benchmarked revenue growth slowed in 4Q19, but TBR expects the colocation market to remain strong amid COVID-19

Market summary

Colocation market

While slowing to single-digit growth, down from 10.6% in 2Q19, the colocation market continues to expand as colocation vendors address the shifting needs of enterprise and hyperscale vendors. According to TBR estimates, benchmarked vendors’ average data center services and colocation revenue increased 8.1% year-to-year in 4Q19 to an aggregate of $3.4 billion. Moving forward, TBR expects incumbents and smaller players alike to continue driving expansion initiatives, particularly in the U.S. Even Japan-based NTT Communications is moving its overseas subsidiaries to become part of NTT Ltd. to better capitalize on market opportunity abroad.

4Q19 Colocation and Data Center Services Revenue Growth_Percentage and Absolute Dollar Growth

Colocation has long been an option for the data center space, but the market is taking on greater importance amid recent IT trends. Rising demand for cloud environments, specifically hybrid models, pushes leading hyperscalers and the modern enterprise to seek out co-located facilities and the managed services vendors have to offer. TBR’s Colocation Benchmark covers the financial performance of leading providers in this space and tracks their business strategies across core colocation markets and for complementary data center services.

IBM Think Digital 2020: Making the case for better together

IBM places hybrid cloud at the center of its digital transformation strategy from both a product and a services perspective

At both the IBM and Red Hat sessions, there was no shortage of content that placed hybrid cloud at the center of digital transformation. Through various keynotes and sessions, IBM’s architectural approach, which places Red Hat as the foundational layer for future innovations, came to the forefront. A key example is the IBM Cloud Paks, which are to IBM Services what Red Hat products are to open-source projects. Cloud Paks provide functionality as a service, making it easy for customers to deploy the middleware functionalities that support solutions and applications. The combination of the advantages of cloud computing with IBM’s trusted ability to manage, update and certify solutions for regulatory compliance enable significant improvements in ability and flexibility. It is an emulation of the Red Hat playbook, albeit with far-reaching implications to the Global Technology Services business.

At the event IBM unveiled the IBM Cloud Pak for Data 3.0, which leverages OpenShift 4.3 to deliver new analytics and data management services. Further, IBM’s Partner Packages is a new incentive program for partners that successfully sell the solutions, underscoring IBM’s desire to facilitate customers’ cloud migrations by combining the expertise of services partners with the flexibility of the Cloud Paks.

However, the hybrid cloud model is anything but confined, and Whitehurst noted that edge devices must essentially operate as little clouds and require the same orchestration and interoperability standards. Edge implications address both the telco and enterprise spaces. Network virtualizations seemingly merge IT and cellular technology (CT) through virtualizing those functions to run on the same common platforms supported by OpenShift. Vodafone Business made the case that it leap-frogged competition in India by building a modern architecture that enabled the company to run IT and CT from the same cloud, delivering better consumer service for voice and extending IBM into the adjacent market of hosting enterprise workloads from the same instance.

IBM Think Digital 2020 made the case that IBM and Red Hat are better together — better together in mixed infrastructure, better together in cloud and AI, and better together in IBM’s and Red Hat’s ways of working. Lastly, IBM and Red Hat are better together with Arvind Krishna as IBM’s CEO and Jim Whitehurst as IBM’s president, as the former can assure customers of the IBM offering road map built on Red Hat’s engine while the latter can instill the operational best practices for managing people, processes and financial metrics for a technology world built increasingly on open platforms and recurring revenue subscription models.

Total commercial IoT market revenue is expected to grow from $385B in 2019 to $687B in 2025, a CAGR of 10.1%

Cloud services and IT services are fastest-growing component segments

Cloud services will continue to be the fastest-growing segment of the IoT market despite inroads from edge and hybrid architectures. IT services, primarily design and implementation services, is also a strong segment, playing a role in both custom solutions and in integration and deployment of packaged and bundled solutions. While budgetary constraints stemming from the COVID-19 pandemic will slow overall IoT growth, cloud-based solutions are often easier to implement and more resilient. They also facilitate remote and distributed development. New wireless communications technologies, including 5G and Narrowband IoT, contribute to IoT growth, lowering costs and making new solutions feasible. Wireless technology enables mobile and distributed solutions, which will be helpful as public and private organizations leverage IoT to meet new requirements.

TBR’s Commercial IoT Market Forecast includes current-year market sizing and a five-year market forecast for multiple commercial IoT market segments and geographies. This research projects growth by technology and vertical, enabling vendors to identify revenue opportunities that most closely align with their go-to-market strategies. The report also provides a view of growth drivers and the ways in which commercial IoT trends will influence the market.