{"id":567873,"date":"2020-12-09T03:48:13","date_gmt":"2020-12-09T03:48:13","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/is-egypt-on-its-way-to-becoming-a-data-hub-part-1-the-data-center-landscape\/"},"modified":"2020-12-09T03:48:13","modified_gmt":"2020-12-09T03:48:13","slug":"is-egypt-on-its-way-to-becoming-a-data-hub-part-1-the-data-center-landscape","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/is-egypt-on-its-way-to-becoming-a-data-hub-part-1-the-data-center-landscape\/","title":{"rendered":"Is Egypt on its way to becoming a data hub? Part 1 \u2014 the data center landscape"},"content":{"rendered":"

<\/a> Is Egypt on its way to becoming a data hub? Part 1 \u2014 the data center landscape:<\/strong> Establishing Egypt as a data hub is a major government priority. In 2018, then-CIT Minister Yasser El Kady hinted at a national strategy<\/a> for this, after state-owned Telecom Egypt said<\/a> it wanted data centers to account for 25% of its revenues within five years. Egypt\u2019s total IT spending was projected (pdf)<\/a> to increase at a compound annual growth rate (CAGR) of 18.6% to EGP 87.7 bn over 2019-2022, and big investments in data centers are underway. But to be a hub we must improve cost-effectiveness and infrastructure, and attract big players, say sources. In part one of this series, we take a look at Egypt\u2019s existing data center landscape.<\/p>\n

Gov\u2019t strategy is more data centers and investment in Egypt: <\/strong>The CIT Ministry\u2019s strategy involves attracting more investment into Egypt\u2019s data center industry and bringing more global data centers here, El Kady announced<\/a> at the 2018 Future of Data Centers summit<\/a>.<\/p>\n

What exactly do we mean by data centers, anyway? <\/strong>A data center is a physical facility used by organizations to house critical applications and data, according to Cisco<\/a>. Enterprise data centers<\/strong> are built, owned and operated by data-producing organizations, on their premises. Managed services data centers<\/strong> are managed by a third-party, with the data-producing organizations leasing equipment and infrastructure. Colocation data centers<\/strong> house data for multiple data-producing organizations, providing power, cooling and security to host hardware and servers. Cloud data centers<\/strong> host data and applications using cloud service providers like Amazon Web Services (AWS), Microsoft (Azure), or IBM Cloud.<\/p>\n

How do we know how much demand there is for more data centers in Egypt? We don\u2019t, <\/strong>Amr Farouk, who heads up the FDC summit, tells Enterprise. \u201cSubstantial investment in hardware and software to build data centers here shows demand is high, but that\u2019s currently the only measuring tool we have.\u201d An overview of total demand would be valuable market research, he believes.<\/p>\n

Investment in Egypt\u2019s data center market in the last two years might total USD 1 bn, <\/strong>from the government and many private sector players, Farouk adds.<\/p>\n

Egypt is one of several countries driving regional growth:<\/strong> Africa\u2019s data center market revenue is expected to grow<\/a> at a CAGR of over 12% from 2019-2025, crossing USD 3 bn. By 2025, total investment on data center infrastructure may be around USD 7 bn. Egypt \u2014 along with South Africa, Kenya, Morocco and Nigeria \u2014 is driving this growth. But the starting point<\/a> is low: Africa has 69 colocation data centers in 13 countries, the Middle East 135 centers in 16 countries, compared to 1257 centers in 23 countries in Western Europe and 1974 centers in North America.<\/p>\n

Egypt is strategically positioned to lead the African and Middle East data center markets<\/strong>,<\/strong> says Sherif Elmasry, managing director of US-based tech company Cornet Elevated<\/a>. \u201cVideo content being streamed in Africa currently comes from either Europe or Asia, meaning the data has to travel from there. Egypt\u2019s geographical positioning in the middle means putting data centers here cuts the time \u2014 and cost \u2014 of data travel, almost in half. A skilled market, the availability of green energy, and the limited number of data centers in the region all make this a promising field for Egypt,\u201d Elmasry adds.<\/p>\n

Our 13 colocation data centers are <\/strong>mainly concentrated around Cairo<\/a><\/strong>:<\/strong> Owners and operators of these centers include Telecom Egypt, Egypt for Information Dissemination (EGID)<\/a>, ECC Solutions, Link, Egypt Network, Raya, Life, GPX, CityNet, and Etisalat.<\/p>\n

How are organizations choosing their data centers?<\/strong> Organizations choose their data centers based on need, says Youssef Amin, market data director at EGID, which owns and operates one of the 13 colocation centers. EGID hosts approximately 150 terabytes of data and serves approximately 120 organizations.<\/p>\n

Banks and other large institutions often prefer colocation centers <\/strong>because they need reliable infrastructure and space for their equipment, says Amin. As they work with sensitive information, data privacy fears may also make them wary of using cloud storage, he adds.<\/p>\n

SMEs, with fewer resources, tend to prefer managed hosting: <\/strong>SMEs are more likely to use virtual machines, provided by data centers or cloud hosting, because their capacity requirements are less, says Amin. The data center manages everything \u2014 from physical server management to connectivity and power \u2014 then provides access to the server.<\/p>\n

For data-driven companies like Arqam FC, cloud storage hits the mark for accessibility and cost-effectiveness:<\/strong> Arqam FC<\/a> stores almost all of its data with Amazon Web Services (AWS)<\/a>, located in the EU, says CEO Ali ElFakharany. This comprises some tens of terabytes of stored data, the amount increasing by the second. The company spends six figures in USD on data storage every year, but the cost is well worth it, he says. When choosing a data storage provider, they prioritized data accessibility, cost and community support: \u201cWe want to be able to access our data 100% of the time. Cost is an important factor. And we need a reliable and well-known community provider we can depend on for tools and documents.\u201d<\/p>\n

While multinationals might make use of different services, depending on infrastructure and design:<\/strong> Some might host everything on the cloud, others may have minor servers in Egypt and abroad, says Amin. \u201cBut it depends on their applications as well. If they\u2019re primarily hosting things like email, these can be in the cloud. But if they have sophisticated applications they want to host locally, they may choose a local data center in Egypt,\u201d he adds.<\/p>\n

It\u2019s reasonable to imagine that many homegrown Egyptian companies generally use their own data storage,<\/strong> says Elmasry. \u201cThe fact that there aren\u2019t many data centers logically means that organizations must have their own.\u201d<\/p>\n

The sector is still too small to be a data hub:<\/strong> Egypt\u2019s existing colocation centers are relatively small, each one providing up to 250 racks for server storage \u2014 approximately one MW of electricity,<\/strong> a source tells Enterprise. Most are 15-20 years old. Hyperscale data centers, needed for cloud<\/a> and big data storage, require at least 1000 racks (approximately four megawatts of electricity), the source adds. \u201cTo be a data hub, Egypt needs hyperscale data centers that allow rapid scaling up. Cloud Service Providers (CSPs) and OTTs \u2014 who own and create the internet traffic and content \u2014 wouldn\u2019t be interested in small size data centers,\u201d says Elmasry.<\/p>\n

So major investments in new data centers are underway: <\/strong>Liquid Telecom<\/a> is looking to grow<\/a> its data center arm in Egypt, two years after announcing a three-year<\/a> USD 400 mn Egypt investment plan. TE has announced<\/a> the construction of Egypt\u2019s largest international data center facility in Smart Village \u2014 aiming to house up to 2000 racks \u2014 presumably part of the EGP 17 bn investment it announced in 2019<\/a> and plans to build<\/a> 4-5 data centers. It\u2019s expected to host Nokia\u2019s Internet Of Things<\/a> platform by the end of the year, and is working to host Microsoft\u2019s cloud network<\/a>. Another major data center, built and operated by Orange for five years with a contract value of USD 135 mn, is opening in the new capital<\/a>.<\/p>\n

While some say the ideal is to move everything to the cloud, ultimately, everything hinges on better infrastructure and cost-effectiveness<\/strong>, say sources. We will examine this in more detail in part two.<\/p>\n

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