<article>A Singaporean startup is betting $1.7 billion on becoming the digital landlord for tech giants building cloud services across Asia and Australia.</article>

A Singaporean startup is betting $1.7 billion on becoming the digital landlord for tech giants building cloud services across Asia and Australia.
AirTrunk Pte plans to build data centers in Australia’s biggest cities of Sydney and Melbourne, with an anchor tenant already signed up as it targets undercutting rivals with lower prices. In the coming months it will sign deals to expand into Singapore and Hong Kong.
Demand for cloud computing is surging as businesses that once ran their technology in-house shift processing power off-site so it can be accessed through the Internet. AirTrunk predicts the Asia Pacific market for data center capacity will be worth $12.5 billion by 2019 and it’s banking on new cooling and electricity delivery systems giving it the edge against giants such as <a href="http://telstra">Telstra </a>Corp. and <a href="http://www.dealstreetasia.com/?s=ntt">NTT </a>Communications Corp.
“Cloud computing in the Asia-Pacific is probably about three to four years behind the U.S., but there is a massive catch-up so cloud operators are investing significant money.” AirTrunk founder Robin Khuda said in an interview. “Right now there’s an enormous shift to the cloud.”
Companies such as <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=amazon">Amazon.com. Inc</a>. spend billions of dollars to build or rent super-cooled, server-filled warehouses. These in turn run the internet, delivering everything from cat videos to commerce.
<a href="http://www.dealstreetasia.com/?s=facebook">Facebook </a>Inc., <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=google">Google</a>, Amazon and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=microsoft">Microsoft</a> Corp. alone will spend $30 billion in capital during 2016 &#8211; a 27 percent increase from last year, according to Bloomberg Intelligence.
AirTrunk’s business model is founded on building halls that it rents out to cloud service providers. It creates a secure space, internet connections, electricity and cooling systems while customers install and control their own racks filled with servers, paying for their power and space. Non-cloud providers are also welcome as long as they buy in bulk.
The company is investing A$1.23 billion ($928 million) in Australia over the next three to four years, with about A$350 million coming within the next 12 months, Khuda said. Future facilities in Hong Kong and Singapore would cost about A$1 billion to build.
Khuda, former chief financial officer of Nextdc Ltd., said AirTrunk’s technology for delivering electricity entails cutting the number of components normally required &#8211; each of which is a potential point of failure that decreases efficiency. The fact that he’s building from the ground up means the data hall is designed around the cooling system, often the biggest user of power, to save energy.
Avneesh Saxena, vice president at IDC’s Domain Research Group, said that while such innovations could help AirTrunk, the market is increasingly dominated by companies with bigger budgets and scale like Telstra and NTT.
“Everything is moving fast towards cloud and towards off-premise so there’s a whole lot of excitement with people who are building data centers,&#8221; Saxena said. &#8220;But mostly it’s restricted, as I see it, between the big players.&#8221;
He also warned that it could be hard to predict how well a data center worked before it was filled with customers.
Khuda said AirTrunk’s technology has been used and proven in the data centers of an Australian bank and a New Zealand-based phone company. He expects to finalize a fundraising of about A$350 million within the next three months.
In his favor is the fact that having physical facilities in key regions around the world is vital for keeping cloud clients happy &#8211; they speed up the delivery of content from closer servers. Some countries are also insisting that data stays within its borders, heightening the need for local suppliers.
But the cost of data centers is so great that many service providers avoid constructing their own buildings in markets like Asia until they have enough customers.
This has resulted in a boom in providers acting as neutral ground. San Francisco-based Digital Realty Trust Inc. has seen its share price surge by 59 percent in the 12 months through Wednesday to hit a market value of $17.5 billion.
“They have to get closer to them, as much as possible,&#8221; Saxena said. &#8220;There are also some government regulations that say ’if you are not in my country I just can’t work with you.”’
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Bloomberg

A Singaporean startup is betting $1.7 billion on becoming the digital landlord for tech giants building cloud services across Asia and Australia.

Startup bets $1.7b on becoming Asia’s digital landlord

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Startup bets $1.7b on becoming Asia’s digital landlord

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