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www.datacenterdynamics.com

It’s contribution

is greater than

energy, agriculture,

Mining …

The Internet and GDP Impact

Derek Webster DC Strategy & Development

www.datacenterdynamics.com

World Wide Wow… a social perspective

The Internet and GDP impact

Every 8th couple has met through the Internet.

First website & server: 1991 published by Tim Berbers Lee (UK) at cern.ch

4,200 new domain names registered per hour. 37 million per year.

Worlds longest telecom cable: FLAG at 28,000km - Japan to UK

News website = information an 18th century person could learn. 100 years ago a person could master no more than 50 books in a lifetime. Today, a person is able to absorb information from 600,000 books (!) …

Average (western) “digital birth” (child’s first online presence) is around 6 months old i.e. parents email pictures of new baby and posts online.

69 % of children aged 2 to 5 use a computer mouse. More young people can play a computer game (58 %) than swim (20 %) or ride a bike (52 %).

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The Area of …

1 Trillion pages = 37,400 km2 (23,300 m2)

How BIG is the Internet ...?

It looks like this

Kuwait

Consumes

170 to 307 GW

Source : Berkley University

Size and traffic is the

weight of a

The Internet and GDP impact

It looks like this

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Most

Trafficked

Websites

The Internet and GDP impact

Chinese

sites not shown ?

i.e. Beiau, Weibo …

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How BIG in an Internet Minute...?

and Growing … The Internet and GDP impact

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Macro Internet Numbers ... enterprise

If the Internet was a Country = global top 5… and growing faster than

Global: 2.4 Billion people connected to the Internet (3 bn by 2016)

$8 Trillion e-commerce transactions in 2011

Internet = 2.9% of Global GDP ($1.7 Trillion)

3.4% of GDP (of 13 larger economies) that = 70% of global GDP

565 million = Number of internet users in China, world #1 by far...

+75% of value added created by the Internet is in traditional industries

Internet GDP = Sweden 7.7% & UK 6.4 – 8.3%

Mature countries growth over last 15 years = 10% internet related

The Internet and GDP impact

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Internet 3.4% of GDP…so what ? Source: OECD 2009

The Internet and GDP impact

Sector % Contribution of Total GDP

%

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Internet 3.4% GDP (2009 - 13 countries) Source: McKinsey

The Internet and GDP impact

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A sharp acceleration from the 10% contribution over 15 years.

Most economic value created by the Internet falls outside of the technology sector. 75% of the benefits are captured by more traditional industries.

United States = largest player in the global Internet supply ecosystem, capturing 30% + of global Internet revenues and more than 40% of net income. Their global ecosystem has relatively equal contributions from hardware, software, services and telecoms.

Internet : 21% GDP Growth in Developed Countries

in Last 5 Years

Internet Maturity = Opportunity

The Internet and GDP impact

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Brazil = 58,5% Data Centres services market in Latin America. Value estimated at US $ 2,3bn in 2012, to US $ 3,6bn by 2017. Investments in data centres are growing 40% to 2016. Frost & Sullivan

2,4% world IT market. 218 m Mobile users, 3rd largest PC Market

81.5 million Internet users (40,9 million broadband access)

High energy cost and difficulty of doing business stood out as key risk factors in operating data centers in Brazil. C&W risk index

Brazilian Electrical Power System:

– Installed capacity of 91GW

– 82% = hydro generation (+ 145,000 MW potential)

– Remaining: 15.2% thermal, 2.19% nuclear power, 0.64% to biomass and wind generation.

Brazil – Spotlight

The Internet and GDP impact

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BRICS Fibre Cable : 34 000 km, 2 fibre pair, 12.8 Tbit/s capacity

Links: Brazil, Russia, India, China, South Africa – BRICS & US

Improved global coverage

Brazil Spotlight - BRICS Cable Q3 2015 (est)

The Internet and GDP impact

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Brazil – Spotlight & Compare Source: intel

Broadband ‘Investment’ Services spur economic growth

Brazil:

Broadband services increased employment growth rate by +1% - 1.4%

Latin America/Caribbean:

10% rise in broadband penetration yields +1.7% in GDP growth.

China:

Every 10% increase in dial-up & broadband penetration contributes up to 2.5% to GDP growth.

Thailand:

Broadband could account for approx: 1% of the GDP growth rate.

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Internet Maturity(broadband penetration)and GDP Growth

“ Internet penetration has a positive impact on economic growth”. (Myongji University South Korea after examining 207 countries)

“A clear path can be found from introducing broadband and its increased penetration to per capita GDP”. (University of Munich 2009)

Every 10% increase in broad band penetration adds 0.9 to 1.5% to per capita GDP growth. (World Bank)

Internet = Ave $500 increase per capita

GDP over the last 15 years.

The Industrial revolution took 50 years

The Internet and GDP impact

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Internet Economy: G-20 GDP = 4.1% Source: ECU,OECD, BCG

The Internet and GDP impact

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2012 Internet users:

almost 200% growth

the numbers in 5 year

Internet Use - Worldwide Growth

Worldwide

The Internet and GDP impact

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Mobile Data – Connected Devices Growth

The Internet and GDP impact

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Internet – Connected Devices Growth (M2M)

The Internet and GDP impact

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defsff

June 30, 2012

World Regions Population

( 2012 Est.)

Internet Users

Dec. 31, 2000

Internet Users

Latest Data

Penetration

(% Pop)

Growth

2000-2012 % Users

Africa 1,073,380,925 4,514,400 167,335,676 15.6 % 3,606.7 % 7.0 %

Asia 3,922,066,987 114,304,000 1,076,681,059 27.5 % 841.9 % 44.8 %

Europe 820,918,446 105,096,093 518,512,109 63.2 % 393.4 % 21.5 %

Middle East 223,608,203 3,284,800 90,000,455 40.2 % 2,639.9 % 3.7 %

North America 348,280,154 108,096,800 273,785,413 78.6 % 153.3 % 11.4 %

Latin America

Caribbean 593,688,638 18,068,919 254,915,745 42.9 % 1,310.8 % 10.6 %

Oceania Australia 35,903,569 7,620,480 24,287,919 67.6 % 218.7 % 1.0 %

WORLD

TOTAL 7,017,846,922 360,985,492 2,405,518,376 34.3 % 566.4 % 100.0 %

Worldwide Internet Users and Population

The Internet and GDP impact

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Share of Internet Population Growth : 2007 – 2012

The Internet and GDP impact

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Cloud - Worldwide Growth & Region

%

Source: Gartner

Worldwide Cloud

Traffic Growth

Cloud Usage

By Region

The Internet and GDP impact

Cloud Innovation Needs Fast Broadband

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Internet : GDP Growth % Aspiring Countries Source: Gartner, OECD, WHO, ICD 2010

The Internet and GDP impact

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Internet G-20 GDP % projection to 2016

Investment opportunities…?

Source: ECU,OECD, BCG

The Internet and GDP impact

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Internet Supply ecosystem impact Source: McKinsey ecosystem index

The Internet and GDP impact

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USA = 30% of global internet revenue: most developed ‘supply

ecosystem’ = 40% of world ICT profits

Venture capital deals in USA = 20% of total Investment (numbers and investment)

Keep costs down o Access a broader range of supplier access o Target Marketing – 15% marketing spending = online marketing.

Drives economic modernization – specifically traditional industries

o Innovation o Higher productivity

Broadband break-even Typical in-ground infrastructure:

o 4 years = Urban o 8 years = Suburban o 15 years = Rural

Internet investments Numbers …

The Internet and GDP impact

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USA Levin - National Broadband Plan to Generate 1,000% ROI

“We spent $20 million on the plan and Congress [says] the

incentive auction is worth $22 billion,” said Levin. “That’s a

thousand-to-one return on investment and it’s better than

Goldman will do on the Facebook IPO.” … March 2012

Return on Investments (ROI) ! Some examples

Malaysia Broadband Cost-benefit-ratio:

Invest MYR 2.4 billion ($800 m)

GDP Impact = +1% and helps Bridge the digital divide

Create 135,000 jobs (2010)

The Internet and GDP impact

Cost-benefit-ratio comparison:

Invest £5bn in Superfast Broadband and add £18bn to GDP and

create 280,000 new jobs (indirect and indirectly) … LSE, Nesta 2012

UK broadband investment = £20 of benefit for £1 spent

UK

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Next Generation Broadband Network (NGN)

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France over the last 15 years 500,000 jobs lost to 1,200,000 created (2.4 gained for 1 lost).

Global view of SME’s is 2.6 gained for 1 lost.

European Commission (EC) predicts in 4 years:

– Will create + 2,000,000 jobs

– Contribute € 636 billion to GDP growth

Internet and impact on Jobs

Companies that fully integrate/use technology create x 2

more jobs against a neutral /negative on companies using

it sparingly or not at all …

The Internet and GDP impact d.webster@andget.co.uk

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Cluster Effect - Benefits of Hub Data Centre's

Population growth 2005-07 +13%

220 new Construction jobs

Approx. $1.3bn Investment

Salary growth 2005-07 +8%

House prices 2005-08 +30%

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GDP Forward look Projection Source: World bank and PwC

2011 2030 2050

MER GDP US $ bn GDP US $ bn GDP US $ bn

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Internet & ICT for the Global Good…

The Internet and GDP impact

United Nations: Internet penetration = key metric to reduce poverty and encourage rational development.

Smart 2020 Report: ICT Potential to reduce global emissions (7.8 Gt by 2020) by 15%.

ICT is part of the solution to climate change:

• Transformative ICT solutions examples:- o E-commerce : -1 bn tonnes CO2e

o Virtual meetings & remote working: -0.5 bn tonnes CO2e

o Smart Grid: -2 bn tonnes CO2e

o Smart Motors: - 0.97 bn tonnes CO2e

o Smart Buildings: -1.7 bn tonnes CO2e

o Smart Transportation: -1.52 bn tonnes CO2e

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