Private Data Exchange Between Businesses Forecasted to Outpace the Public Internet by Nearly 2x in Growth and 6x in Volume by 2020

REDWOOD CITY, Calif., Aug. 16, 2017 /PRNewswire/ -- The capacity for private data exchange between businesses is outpacing the public Internet, growing at nearly twice the rate and comprising nearly six times the volume of global IP traffic by 2020, according to the Global Interconnection Index, a new market study published by Equinix that analyzed the adoption profile of thousands of carrier-neutral colocation data center providers and ecosystem participants globally. As business models become increasingly digital, distributed and dependent on the real-time engagement of many more users, partners and service providers, the Index is a powerful new research tool. It highlights how companies are translating digital transformation into action and creating entirely new ways of connecting with their customers, partners and supply chain. The Index will provide an annual baseline to track, measure and forecast the growth of Interconnection Bandwidth, defined as the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points.

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"Some of the greatest technology trends of our lifetime, including mobile, social, cloud and the explosion of data, are creating disruption on the scale of the Industrial Revolution," said Sara Baack, Chief Marketing Officer for Equinix, Inc. "In this new reality, it's a 'scale-or-fail' proposition and companies are succeeding by adopting Interconnection, locating their IT infrastructure in immediate proximity to an ecosystem of companies that gather to physically connect their networks to those of their customers and partners. Interconnection helps fuel digital transformation by supporting multicloud consumption at scale, improving network latency and performance, enabling greater operational control, and reducing security risk."

According to the Index, Interconnection Bandwidth is expected to grow at a 45 percent CAGR to reach 5,000 Tbps by 2020, dwarfing Global IP traffic in both growth (24 percent) and volume (855 Tbps)(1). It is also growing faster than Multiprotocol Label Switching (MPLS), the legacy model of business connectivity, by a factor of 10x (45 percent to four percent)(2).

Key macroeconomic, technology and regulatory trends that are impacting Interconnection growth include:

    --  Digital Technology Use, which forces the need to support real-time
        interactions requiring more Interconnection Bandwidth. According to
        Accenture, digital technology use is projected to add $1.36 trillion in
        additional economic output in the world's top 10 economies by 2020(3).
    --  Urbanization, which is transforming global demographics and creating a
        proximity need for digital services concentrated across metro centers
        globally. More than two billion people are expected to migrate to major
        cites by 2035, creating as many as 50 major urban metro hubs(4)
        requiring dense Interconnection fabrics.
    --  Cybersecurity Risk, which expands Interconnection consumption as firms
        increasingly shift to private data traffic exchange to bypass the public
        Internet and mitigate against digital threats. By 2020, an estimated 60
        percent of digital businesses will suffer major service failures(5) as
        breaches permeate across physical and digital platforms.
    --  Global Trade of Digitally Deliverable Services, which ushers in a new
        era of dynamic business processes and demand for Interconnection. Global
        digital workflows require a global mesh of Interconnected metros to
        fulfill demand. According to McKinsey(6), trade in digitally deliverable
        services now comprises 50 percent of total services exports globally,
        with an expected 9x increase by 2020.

Highlights / Key Facts

    --  The Index provides significant insight into regional differences in how
        Interconnection is accelerating in different regions of the world. 
        While the U.S. is forecast to have the largest amount of Interconnection
        Bandwidth, it is the most mature region, and other regions are more
        rapidly provisioning Interconnection Bandwidth to rival the projected
        deployment levels in the U.S. The following table outlines projections
        across all four regions:


    Interconnection Installed Bandwidth Capacity (Tbps)
    --------------------------------------------------

                                              2016       2017  2018  2019  2020 CAGR
                                              ----       ----  ----  ----  ---- ----

    Region
    ------

    US                                         472        654   913 1,275 1,795      40%
    ---                                        ---        ---   --- ----- -----      ---

    EU                                         335        473   681   987 1,451      44%
    ---                                        ---        ---   ---   --- -----      ---

    AP                                         246        355   519   759 1,120      46%
    ---                                        ---        ---   ---   --- -----      ---

    LATAM                                       92        154   249   395   626      62%
    -----                                      ---        ---   ---   ---   ---      ---

    Total Region                             1,144      1,636 2,363 3,417 4,991      45%
    ------------                             -----      ----- ----- ----- -----      ---

    --  The Index also forecasts Interconnection Bandwidth by use case for both
        enterprises and service providers. The largest use case is associated
        with traditional IT deployment models, in which businesses connect to
        network providers as an intermediary path to reach business partners and
        customers. However, the fastest growing use case is enterprises
        connecting directly to a range of cloud and IT service providers,
        confirming the transformational shift of IT infrastructure from
        centralized, enterprise-owned data centers to decentralized, physically
        dispersed multicloud environments. The following table outlines
        projections for the top enterprise and service provider use cases:


    Interconnection Installed Bandwidth Capacity (Tbps)
    --------------------------------------------------

                                                        2016 2017 2018  2019  2020 CAGR
                                                        ---- ---- ----  ----  ---- ----

    Enterprise Use Cases
    --------------------

    Interconnecting to Network Providers                 372  571  880 1,341 1,986       52%
    ------------------------------------                 ---  ---  --- ----- -----       ---

    Interconnecting to Cloud & IT Providers               12   31   80   209   547      160%
    ---------------------------------------              ---  ---  ---   ---   ---       ---

    Interconnecting to Supply Chain Partners               5    9   17    29    45       73%
    ----------------------------------------             ---  ---  ---   ---   ---       ---


    Service Provider Use Cases
    --------------------------

    Interconnecting to Network Providers                 537  703  913 1,167 1,459       28%
    ------------------------------------                 ---  ---  --- ----- -----       ---

    Interconnecting to Cloud & IT Providers               30   50   85   145   248       70%
    ---------------------------------------              ---  ---  ---   ---   ---       ---

    --  The centricity of digital technology is disrupting how business is done
        across all industries, forcing companies to invent new,
        information-centric business models. The Index forecasts the banking and
        insurance segment will be the largest consumer of Interconnection
        Bandwidth, as digitization is forcing this industry to support new
        customer engagement models. Telecommunications is projected to be the
        second largest segment, with the need to provide coverage in many new
        locations and support the proliferation of connected devices and
        sensors. The third largest segment is projected to be cloud and IT
        services as it provides a critical building block for digital
        enablement. The following table breaks down the projections by industry:


    Interconnection Installed Bandwidth Capacity (Tbps)
    --------------------------------------------------

                                                        2016 2017 2018 2019 2020 CAGR
                                                        ---- ---- ---- ---- ---- ----

    By Industry
    -----------

    Banking & Insurance                                  144  230  367  590  958      61%
    -------------------                                  ---  ---  ---  ---  ---      ---

    Telecommunications                                   319  409  523  662  826      27%
    ------------------                                   ---  ---  ---  ---  ---      ---

    Cloud & IT Services                                  221  314  445  607  820      39%
    -------------------                                  ---  ---  ---  ---  ---      ---

    --  As crucial as Interconnection is to how digital business is conducted,
        it has never been quantified. The Global Interconnection Index changes
        this with industry-first projections of how Interconnection growth and
        access will unfold through 2020. This in-depth view arms businesses with
        the data-driven insight they need to consider their own Interconnection
        strategy for digital business success. For the first time, organizations
        can see multi-dimensional projections of Interconnection Bandwidth
        requirements by region, industry, use case, firmographics and maturity
        model.

Industry Perspectives on the Global Interconnection Index

    --  Brad Casemore, Research Director, Datacenter Networks,
        IDC:"Interconnection is an integral building block for digital business.
        The Global Interconnection Index provides a barometer of the growing
        relevance of the need to solve for proximity to digital services across
        all industries. This need is driven by latency, accelerating time to
        market and integrating multicloud on a local basis."
    --  Munu Gandhi, Vice President, Core Infrastructure Services, Aon:"The
        Global Interconnection Index captures a critical component to enabling
        digital business: Interconnection. Reliable and robust Interconnection
        capabilities across ecosystems like those outlined in the Index will be
        increasingly important for companies to enable new paths for global
        growth and opportunity."

About The Global Interconnection Index

The Global Interconnection Index was developed by creating a market baseline that analyzed the deployment profile of thousands of carrier-neutral colocation data center providers and the participants deployed within them globally across every region and major metro. This data was combined with local and regional market data (including macroeconomic trends, market demographics and industry concentrations), and with key demand drivers of digital business, to form a weighted demand multiplier to assist in predicting growth to factor the impact of digital business transformation. A detailed methodology description is included in the Global Interconnection Index.

Additional Resources

    --  Interconnection Strategy Guide
    --  Global Interconnection Index Infographic
    --  Colocation-Based Interconnection Will Serve as the 'Glue' for Advanced
        Digital Business Applications [Gartner Report]
    --  Interconnection 201: Blueprints for the Interconnected Enterprise [451
        Research Report]
    --  www.IOAKB.com [Interconnection Open Community Knowledgebase]

Footnotes

    1. Cisco -- Visual Networking Index: Forecast and Methodology, 2016-2021,
       June 7, 2017
    2. Research and Markets -- Global MPLS Market Growth of 4.4% CAGR by 2021,
       September 2016
    3. Accenture Strategy -- Digital Density Index: Guiding Digital
       Transformation
    4. "Connectography" by Parag Khanna, April 19, 2016
    5. Gartner -- Special Report: Cybersecurity at the Speed of Digital
       Business, August 30, 2016 (ID: G00315580)
    6. McKinsey Global Institute -- Digital Globalization: The New Era of Global
       Flows, March 2016

About Equinix

Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most interconnected data centers. In 44 markets worldwide, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies. http://www.equinix.com/

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to the risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.

Equinix and IBX are registered trademarks of Equinix, Inc.
International Business Exchange is a trademark of Equinix, Inc.

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