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UK Vote to Leave the EU Could Alter Leadership in Data Center Markets

July 07, 2016

The demand for constant access to network capabilities and the data center has created significant demand across a number of different markets. While political decisions don’t always get in the way of transforming network infrastructure, a recent move by the U.K. has the potential to upset the data center market there and create opportunities for the U.S.

For years, the U.K. has been the leading market for data centers in Europe. According to this recent piece in InformationWeek, that leadership could be threatened by Brexit as voters demonstrate their preference to leave the European Union. An analysis by 451 Research suggests that the vote has created an air of uncertainty about London’s role in the multi-tenant data center and hosting markets.

Companies focused on transforming network infrastructure and focusing on European markets tend to use London as their European base. Brexit now challenges that strategy and could prompt providers to consider a different location. This could not only affect those companies providing data center solutions, but also the more than 1.5 million people employed to keep up with demand.

"London is currently the European capital of the data center, hosting, and cloud markets," said Rory Duncan, research director for European services at 451 Research, in InformationWeek. "It's considered somewhere that is easy to do business. It's the most cosmopolitan and diverse location in terms of IT service providers, has the broadest supply, the largest choice of facilities, a common working language, and a skilled labor force -- particularly in the tech-rich Thames Valley."

The vote has the potential to open the door to main metro markets for hosting and data center services in places like Paris, Frankfurt and Amsterdam, especially when companies move to actively seek options outside of the U.K. And while it sounds great to have the opportunity to get a slice of that market, supply issues could get in the way and limit opportunities simply because they can’t move fast enough to satisfy the demands of the market.

While some suggest this only opens more opportunities for the data center market in the U.S., not all providers have their ducks in a row to position themselves effectively for the necessary growth to support that kind of demand. Too many providers in the center of transforming network infrastructure activities have made solid decisions on what kind of higher-level services to offer, the type of customers they want and where they should expand. At the same time, the weakness of the pound makes the U.K. more appealing for U.S.-based companies.

Only time will tell just how much of an impact the vote has on the data center industry in the U.K. While we are certain to see changes, whether, or not they have a substantial impact on the market as a whole remains to be seen. 

Edited by Maurice Nagle

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