From Vostok with love
To put Russia’s data centre shortfall, or the size of the untapped market into perspective, across the whole of the Russian Federation there is less commercial data centre capacity than in Luxembourg, says Willner. As a quick comparison, Luxembourg is just over 2,500 km2 with a population just over half a million. Russia, in stark contrast, is 17.1 million km2 with a population exceeding 144 million.
“If you multiply data centre capacity in Russia by about 20, you’ll be getting close to the average across Europe so there’s a way to go” adds the IXcellerate CEO. “On top of that there are 19 cities with over a million population, spread across almost a dozen time zones. When it comes to it, with such a vast land, delivering Internet content to Vostok from Moscow, which might well have come from Tokyo just around the corner, is kind of illogical. So I think in the medium term, we’ll see data centres right the way across Russia.”
Concluding, Willner, who has over 20 years’ experience in the data centre industry, believes there is a great potential in Russia for the hyper-cloud but is frustrated with the investment community focusing their efforts on large scale data centre facilities across mainland Europe.
“The sad fact that we have is that every day, there is a new data centre popping up in Germany, France, UK, Netherlands, US, Canada, Australia,” he says. “Everybody is pounding these markets to death at the moment, with data centre and megawatts, because the money is easy, because the investors think, “Oh, it’s just data centre. I’m going to make a great return.” And the dirty little secret is a lot of these investors are not making any return at all, because they’re a bit naive and they may be very property focused, and they don’t have much experience in the market.”
Willner adds: “And so it’s a bit like the hotel industry. It’s kind of the second or the third owner who actually makes the money, because they bought the asset at a discount. So that’s what’s happening in the western markets where money is cheap, and interest rates are 3%. It’s admittedly harder to build out projects in newer untapped markets such as Russia but with higher risk comes higher reward.”