Singapore Data Center Startup to Challenge Asia Pacific Players update from July 2016

*Updated with analyst commentary

Asia Pacific as a whole is viewed as a major growth market for cloud services. As such, it is also a major growth market for data center service providers, who give cloud companies based overseas a lower-risk way to get started in new markets than building their own data centers.

Australia, Singapore, and Hong Kong are three of the region’s especially promising markets. There are also Japan and mainland China, but a new Singapore-based data center provider is going after the other three first.

The startup, called AirTrunk, is planning to build data centers in Sydney and Melbourne for an anchor tenant it has already secured, according to a Bloomberg report. It is going after cloud providers as its primary target customers and plans to undercut competitors with lower prices, the report said.

The company claims it will be able to provide lower prices because of its efficient data center design, although details of the design have not been disclosed. This value proposition will be key to AirTrunk's ability to compete in these highly competitive Asia Pacific markets.

"AirTrunk’s ability to deliver a more cost-effective colocation service compared to the current landscape of wholesale providers in the Asia Pacific region, coupled with management’s experience of doing business in the region, puts it in a favorable position despite being a newcomer in the already hyper-competitive Sydney, Singapore, and Hong Kong markets," Jabez Tan, research director for data center infrastructure at Structure Research, told Data Center Knowledge.

AirTrunk’s founder, Robin Khuda, who formerly served as CFO of the major Australian data center provider NextDC, told Bloomberg that his company plans to invest A$1.23 billion ($928 million) in Australia over the next three to four years.

About $350 of that will be spent within the next 12 months, he said, although the financing for this initial round of investment has not been finalized. He expects to finalize it with the next three months.

It will cost another A$1 billion to build the Hong Kong and Singapore data centers the company has planned.

AirTrunk is up against established data center services heavyweights in all markets it is going after. In Australia, it will be competing with the likes of Telstra, which is also a major partner of Khuda’s former employer NextDC, Japan’s NTT Communications, and Silicon Valley-based Equinix, among others.

In the Singapore data center market, which despite its tiny size has about 50 data center providers, AirTrunk will be up against local providers Singtel and Keppel, as well as US-based Digital Realty Trust and Equinix, to name just a few.

Read more: Singapore is a $1B Data Center Market and Growing Fast

Equinix and NTT are also major players in Hong Kong. Other big providers there include Hong Kong-based PCCW and iAdvantage, a subsidiary of SUNeVision.

Read more: Hong Kong, China’s Data Center Gateway to the World

While it's initial focus is on the Australia, Hong Kong, and Singapore data center markets, AirTrunk is likely to expand to growing secondary markets in the region as well. AirTrunk "management also understands the importance of entering new frontiers within the region – particularly in growing tier-two markets, such as Philippines, Indonesia, and Thailand," Tan said.