Market Trends of Philippines Data Center Rack Industry
IT & Telecommunication holds the major share.
- Increasing digital adoption creates more need for data storage space in the region. For instance, Alibaba Cloud Intelligence intends to invest more in the Philippines after opening a data center. At a press conference in Makati, Allen Guo, the country manager of the giant technology company, said that it was considering increasing its data center's capacity to meet the growing demand for digital platforms. In the Philippines, approximately 88% of enterprises are using cloud-based solutions.
- The growing demand for analytics and software for business purposes by the public and private industries is expected to boost the growth of the cloud segment.
- Moreover, In recent years, the market for cloud gaming has grown significantly, with more and more players opting to use cloud-based solutions instead of traditional video games. For instance, The first 5G eSports hub in the Philippines was launched by Smart Communications, marking the occasion of the first cross-platform gaming exhibition match to be held on the cloud, a nationwide first.
- The growth in the telecom segment considerably increased after the pandemic, with new remote work and online study options being adopted as the new normal. Further, Streaming services, online gaming, and shopping contributed to the considerable increase in the demand for data centers from the telecom industry. The Department of Information and Communications Technology brought out a new policy called the Common Tower Policy, which is expected to further improve the quality of mobile networks.
- Additionally, Telecom operators are expanding their bases to strengthen their network connectivity across the country. For instance, PLDT's mobile arm, Smart Communications, increased the count of its 5G substations to 7300 in 2022 to strengthen its 5G networks. Most of its new 5G BTS are rolled out in Metro Manila, Tarlac City, Silang in Cavite, and Laguna's Cabuyao, Lumban, and Santa Rosa.
Understand The Key Trends Shaping This Market
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Full Rack is Expected to Grow Significantly
- In the Philippines, due to growing space scarcity between various companies, the full rack has a majority of the market share. In order to cope with increasing rack capacity due to the rapid growth of mobile broadband, e-commerce, and the increase in Big Data Analytics combined with cloud computing, it is necessary to build a fully rack-equipped data center.
- For instance, the Philippines eCommerce market generated sales of 17 billion USD in 2021, representing a significant contribution from 73 million online users. It is expected that by 2025, it will be USD 24 billion, with a growth rate of 17%.
- At first, there was a limited focus on rack space in data centers; only size and cost were taken into account during deployment. Nevertheless, there is an opportunity for increased use of rack space in the data center as more and more users from different sectors, such as online banking, telecommunications, media and entertainment, and others, are adopting applications with higher density.
- Further, Companies increasingly rely on data centers for efficient management of their databases and storage, as they generate significant amounts of data every day. The main driving factor for data center rack usage is, therefore, the increased deployment of fully configured data centers. Also, the growth of the market is being influenced by the growing demand for IT services and investments made by large companies.
- Hyperscalers (mostly prefer full-rack units) consider the Philippines to be the optimal place to host DC facilities. In May 2023, a joint venture between Globe Telecom, Inc., Ayala Corp., and the local unit of Singapore-based service provider ST Telemedia Global Data Centres (STT GDC) announced a 124 MW data center plan.
