Subscription-based services to dominate digital infrastructure by 2026

Global investments in new digital infrastructure will see 80% facilitated through subscription-based services by 2026, according to the latest Global Interconnection Index (GXI) 2024. The trend signals an important shift by IT decision-makers away from long-term purchases of physical equipment such as servers, routers, and storage arrays, towards more flexible subscription-based models. This change from capital expenditure (CAPEX) to operational expenditure (OPEX) began with multicloud adoption, but is now becoming standard across all infrastructure out to the edge, allowing businesses to remain agile while ensuring access to the latest technologies.

Steve Madden, Vice President of Digital Transformation & Segmentation at Equinix, emphasised the disadvantages faced by businesses which continue to purchase hardware, instead of shifting to the newer model. He stated, "Industry patterns have shown that the traditional procurement process of buying your own IT hardware, if that is not your business, is becoming a competitive disadvantage. The pace of hardware innovation is increasing (especially with GPU technologies), putting pressure on price-performance ratio and infrastructure efficiency. Subscription models can offer continuous improvement and easier adoption of new technologies already in place."

The GXI 2024 report also highlighted the continued expansion of the digital economy, predicting a 34% five-year compound annual growth rate (CAGR) for global interconnection bandwidth which is estimated to reach 33,578 terabits per second (Tbps) by 2026. Organisations are also reaching out more within their ecosystems, connecting with 30% more business partners in twice as many locations.

The significant growth in edge infrastructure was also noted, with this area expanding at over double the rate of the core through to 2026. The demand for interconnection is growing fastest in Greater China where core and edge metros are paving the way. Shanghai is the world's fastest-growing core metro with a projected 39% CAGR by 2026, closely followed by Hong Kong with 37%. Guangzhou, Shenzhen and Beijing are also expected to see substantial growth with a projected 42-43% CAGR by 2026.

The enterprise sector in the Asia-Pacific region is additionally earmarked for rapid expansion, currently holding 28% of global interconnection bandwidth. It is expected to grow at a 35% CAGR to 9,283 Tbps by 2026, with enterprises outpacing service providers in growth rates.

Elias Khanser, Chief of Research at EK Media Group, stated that subscription-based access was vital for scaling digital infrastructure capable of coping with transformation resulting from technologies like AI and edge. Similarly, Joanne Hon, Managing Director at Equinix Hong Kong, recognised the huge interconnection bandwidth growth expected in Hong Kong and Greater China by 2026, emphasising the importance of interconnection in these regions and Equinix's strong position to meet these demands.