The digital revolution is accelerating at an unprecedented pace in Asia-Pacific, fuelled by a surge in demand for cloud services and the relentless growth of data. This rapid digitalisation isn’t just reshaping industries; it’s also driving the expansion of the data centre market.
One of the players navigating this complex landscape is Digital Edge, a data centre operator that seeks to balance the increasing demands of high-intensity workloads while considering the growing demand for sustainability.
In this interview, Frontier Enterprise speaks with Samuel Lee, Chief Executive Officer of Digital Edge. Lee provides his insights on the evolving data centre sector in APAC, the strategies Digital Edge is employing to grow and innovate in this dynamic arena, and more.
What key market trends and opportunities do you foresee in APAC data centre markets, and how does Digital Edge differentiate itself in this highly competitive environment?
The APAC data centre market continues to grow rapidly, fuelled by the pandemic-induced surge in digital services use, particularly in emerging markets. A recent Structure Research report on the global colocation market estimated the industry will exceed US$100 billion for the first time ever by 2026, with Asia expected to account for half of this.
Moreover, global spending by end users on public cloud services is predicted to increase by 20.7% and reach US$591.8 billion in 2023, up from US$490.3 billion in 2022. This trend has further driven demand for data centres throughout Asia, with the need to deliver adequate capacity and provide hyperscalers with the international standard of digital infrastructure they expect.
At Digital Edge, we have three core unique selling points that enable us to distinguish ourselves from our competition and capitalise on the growing demand across the region
- Firstly, we are a purely Asian-focused business that truly understands the dynamics of the region. Our management team comprises nine different nationalities, speaks multiple languages, and collaborates with local partners across the region who understand and respect the nuances of each local market to ensure success.
- Secondly, we are one of the few genuine carrier-neutral data centre platforms that can cater to both retail and high power density hyperscale deployments. This allows us to work with and attract multiple customers to our digital ecosystem.
- Lastly, we are committed to embedding environmental, social, and governance (ESG) principles at the heart of what we do. While other, more established data centre platforms are now incorporating ESG commitments into their operations, as a young company, we have the opportunity to get things right from the start.
What distinct challenges do you encounter operationally with the increase in data centre capacity demands in APAC? How does Digital Edge navigate these challenges?
The recent global energy crisis has posed a significant challenge for the data centre industry, with varying impacts across markets. This, coupled with growing ESG requirements from investors and customers, is placing ever greater pressure on operators to build more efficient and sustainable data centres. Our engineering team continues to refine the design and operations of our facilities to enhance our energy efficiency and ensure we make better use of resources, including retrofitting older sites and pioneering cooling technologies.
Another key challenge is the industry-wide talent shortage, which is expected to reach 2.3 million globally by 2025. At Digital Edge, we have expanded our workforce to over 400 employees in the three years since our inception, but the competition for talent remains fierce. To address this, we focus on training our employees, while also ensuring our benefit packages and compensation are competitive with, or exceed, those of our industry peers.
Lastly, Asia is a diverse region, and each market has its own unique characteristics. We recognise that what works in one country may not be successful in another. That’s why we strive to identify suitable local partners who can guide us through new territories, ensuring that the quality of services remains consistent across our platform. For instance, for our new Tokyo project, we have partnered with Hulic, a Japanese real estate developer, to combine our experience in designing and constructing data centres with their local property development knowledge.
What emerging innovations do you believe will have a significant impact on the APAC data centre industry in the near future? What is Digital Edge’s response to these innovations?
It’s hard to predict exactly which innovations will have the most significant impact, but numerous trends are already shaping the data centre industry. Digital Edge is committed to incorporating innovation across our operations to ensure our facilities are prepared for the future.
The rise of new technologies such as the Internet of Things and artificial intelligence will likely drive the need for more data storage and processing. Low latency is often a critical aspect of the customer experience with these new technologies, prompting internet and cloud providers to aim for equipment deployment closer to the end user. To this end, Digital Edge is building digital infrastructure in both emerging markets and second-tier cities, such as Osaka in Japan.
Big data is another factor driving demand for data centres while also presenting opportunities for innovation within data centres. It can be used to monitor and optimise data centre operations in real time, including cooling and power management, and detecting and responding to environmental sensors and hazards. Digital Edge is exploring ways to use this technology to maximise uptime and enhance the customer experience.
Robotics is another technology likely to drive innovation in the data centre industry. A pilot programme for a robot was recently launched at our new facility in Manila. This robot is designed to offer facial recognition for visitors, automated user management, and automatic surveillance to detect movement in IT areas. It will also conduct auto-security photo checks throughout the facility, enhancing security protocols and overall efficiency.
What is Digital Edge’s strategy to achieve lower power usage effectiveness and carbon neutrality by 2030? What innovations are Digital Edge introducing to promote sustainability?
Digital Edge aims to achieve carbon neutrality by 2030 through several actions, including transitioning 100% of our electricity consumption to renewable or carbon-free sources. In line with this goal, we’ve recently joined the Science Based Targets initiative and set a near-term, company-wide emissions reduction target.
We have also set targets for the power and water usage effectiveness of all our new-build data centres, aiming to achieve an annualised PUE of 1.25 or less at 70% load and a WUE of 1.5 or better at our greenfield sites. For instance, we deployed Nortek’s Statepoint liquid cooling system at our new NARRA1 data centre in the Philippines, which has helped us achieve a PUE of 1.15 at 75% load during the initial testing phase. This is noteworthy given the hot and humid climate of the Philippines.
In our data centre construction projects, we focus on sustainable design, including leveraging circular economy principles where possible. For example, during the construction of our Manila data centre, we reused and maintained structural elements from the existing brownfield site, comprising 62.75% of the total area of the flooring, roofing, exterior framing, and interior walls.
Moreover, we continue to collaborate with vendors, suppliers, and partners that share our commitment to sustainability. This includes investing in Bloom Energy fuel cell technology for our new data centre project in South Korea to help reduce carbon emissions, and working to elevate industry standards through organisations such as the iMasons Climate Accord.
As new data centre growth markets emerge in APAC, how does Digital Edge assess and evaluate these markets? What is your expansion strategy for these markets?
Our management team considers numerous factors when evaluating new markets and potential data centre sites. These factors include customer demand, local regulation, scale, and power availability.
Digital Edge has expanded rapidly since our launch in 2020. Our current portfolio comprises 17 data centres across six markets, including the recently opened 10MW NARRA1 data centre in Manila and the 23MW EDGE2 site in Jakarta, which is expected to be operational later this year.
Our goal is to grow to a platform with over 500MW capacity in the next five years. With our ongoing construction projects, we are on track to achieve this capacity. Our current focus is on delivering these projects and consolidating our existing platform to ensure a consistent, integrated experience with the same standard of service across all our facilities.
How is Digital Edge adapting its technology to accommodate the growing demands of high-intensity workloads such as big data analytics and streaming? What upcoming technology challenges does Digital Edge foresee in relation to these workloads?
Digital Edge uses up-to-date technologies to handle the growing demands of intensive workloads, which include big data analytics, AI, VR, and streaming. It’s crucial to keep our facilities ready for both current and future customer needs, which is why we continually update and improve them.
One of the operational challenges with higher-intensity workloads is ensuring sufficient cooling capacity to accommodate these high power density deployments. As mentioned earlier, we are open to deploying new technologies in this area, such as Nortek’s liquid cooling system, which uses a new approach to cooling for the colocation data centre environment. The membrane exchanger technology enables evaporative cooling through a microporous membrane, which can help reduce annual power and water consumption.
Which industries in APAC are driving demand for hyperscalers? What would be the optimal hyperscaler development strategy for companies in APAC?
Several industries are driving hyperscale demand in the APAC region, although the specific industries vary from market to market. E-commerce is one of the fastest-growing industries, driven by an increasing number of consumers shopping online, particularly in the aftermath of the pandemic. E-commerce companies need large-scale, high-performance computing infrastructure to process and handle the vast amounts of data generated by online transactions.
Financial services is another industry that consistently drives demand for hyperscalers. Despite facing stricter regulatory and compliance rules around data storage and security, financial institutions continue to adopt digital-first models. The global finance cloud market is projected to reach US$90.11 billion by 2030, which will likely further increase hyperscale demand.
From a data centre perspective, we see a continual trend for hyperscalers to adopt a hybrid model of both colocation and self-build projects. Colocation offers hyperscale customers the flexibility to adjust their capacity without assuming the risk of a full-scale investment, which is particularly important when entering emerging markets. As a regional platform offering colocation services in these developing markets, we aim to respond to the growing demand for hyperscale, high-power-density applications.
