Japan's Data Centers Excluded From Power Conservation Measures

by: Paolo Gorgo

The last time we wrote about the impact to the Japanese data center industry of the devastating earthquake and subsequent tsunami that hit the country in March 2011, we also mentioned the fact that the Japanese government was recognizing the key importance played by data centers in keeping critical services operating during and after those terrible events.

A few months afterward, the Japanese data center industry succeeded in joining other key services like railways and hospitals in being exempt from complying with the new power conservation measures designed to maintain critical power provision during the summer.

To give an idea of the impact on Japanese businesses of these regulations, starting from the beginning of July, Nissan Motors (OTCPK:NSANF) has been moving shifts to weekends and instead taking Thursday and Friday off in order to lower consumption at plants and offices during peak power-need periods. Similar efforts are being taken by other companies like Toyota (NYSE:TM) or even in other key production sectors for the country, like electronics.

As a side effect, most companies are also looking to reduce their own energy use (and improve reliability) by outsourcing their IT operations – creating more demand for data center services.

It is no surprise that expansion plans proceed as planned in the industry; as DataCenterDynamics reported, data center operator IDC Frontier, a subsidiary of Yahoo Japan (OTCPK:YAHOF), is already planning to build a fourth module on its data center campus on the Kyushu Island (southwestern Japan), while the third module is under construction and expected to launch at the end of September 2011.

“This data center is going to be used in three ways,” Atsushi Yamanaka, an IDC Frontier general manager, explained. “One is colocation for the external customers and another one is (for) the cloud computing service that we provide. Another one is internal use.”

About six-times more potential clients inquire about IDC Frontier’s services now than before the earthquake, Yamanaka said.

The possibility for long term outage hitting data centers still remains, as Mr. Yamanaka reminded during a recent conference in San Francisco, but the industry showed so far an incredible capacity to withstand the challenges that hit Japan after the earthquake.

Data center Internet Initiative Japan (NASDAQ:IIJI) just launched a new data center in the Osaka-Kobe metropolitan area. As DataCenterDynamics reports:

The company said the new facility would address the rise in demand for disaster-recovery and business-continuity infrastructure in the area created in the aftermath of the earthquake and tsunami that struck northeastern Japan in March.

“The drive to build more backup data centers in the Osaka area has become an integral part of disaster recovery plans and business continuity plans since the Great East Japan Earthquake, and the new Kozu data center was constructed to meet this need,” IIJ representatives wrote in a statement.

Just a few weeks ago, Equinix (NASDAQ:EQIX) announced that Globe Telecom, a Philippine network carrier, expanded its network points-of-presence to Equinix’s Tokyo-2 data center, making it a key node that will enable an international gateway between the Philippines and the United States and help Globe Telecom meet increasing demand for connectivity services in the region.

The new Equinix Tokyo 3 data center will soon add about 960 cabinets to the company's footprint, an investment of about $70 million for the US-based company.

Demand doesn't seem to be an issue right now for colocation providers in Japan, which are struggling to respond to their customers' increased requirements and to keep a reliable, essential service to the country.

Disclosure: I am long EQIX.