Equinix Inc. (EQIX - Analyst Report) is aggressively moving ahead with its plan of developing more data centers across different geographical locations. Moving on those lines, the company recently declared its plan to build an International Business Exchange (IBX) data center in Osaka, Japan.
The first of its kind in West Japan, the data center will require an investment of $12 million in the first phase, which will be operational by the fourth quarter of 2013. It will be developed in collaboration with K-Opticom and Kanden Energy Solutions (KENES), the technology access providers in Osaka/Kansai area.
The company also expects that this data center will strengthen the global network connectivity in the Osaka region and maintain a direct connection with the network core in Dojima.
Equinix has four operational data centers in Japan in order to be able to tap into the increasing demand for data centers in Japan and the Asia Pacific region.
A recent data center industry report was published in the ‘Computer News Middle East’ (www.cnmeonline.com), by an independent research firm – Campos Research & Analysis. As per the study, which surveyed 401 senior decision makers from the data center industry across Singapore, Australia, Hong Kong, and Japan, 83.0% of the veterans plan to expand the number of data centers through 2013 to 2014.
The main reasons behind the decision were increased security needs by end users and the need to have a disaster recovery system in place. Moreover, a strong preference has been witnessed by the researchers among the respondents for the Asia Pacific region.
Equinix, being a major player in the data center space, is making an effort to grab a major share of this increased demand by renewing its focus on the Asia-Pacific and Japan (APJ) region. The solid prospects in the region may be expected to drive its growth.
Expansion in important markets and consolidation of facilities inexisting ones have been part of Equinix’s core strategy. Of course, increasing competition from the likes of AT&T Inc. (T - Analyst Report) , Equinix’s European exposure and industry consolidation remain headwinds.
Equinix carries a Zacks Rank #2 (Buy). Investors can also consider other stocks such as Calix Inc. (CALX - Snapshot Report) , having a Zacks Rank #1 (Strong Buy) and Adtran Inc. (ADTN - Analyst Report) having a Zacks Rank #2 (Buy).