Sami Badri, Credit Suisse: How Will 5G Impact the Data Center Sector?

DULLES, VA – CapRE has often welcomed Sami Badri, Senior Analyst at Credit Suisse to speak at our Data Center Summits, in which he has recently focused on outlining a handful of forces that will accelerate cloud demand in the future. Fortunately for us, Badri was willing to serve as Keynote Speaker at CapRE’s recent Data Center & Cloud Infrastructure Forecast 2012, where he dove deep into a new area of research for him – 5G. Below, we highlight the introductory remarks of his presentation, which honed in on three core questions — what exactly is 5G, how is it going to the data center sector, and then when is it going to impact the data center sector?

New Square“What I really want to talk about is this random two-letter word [5G] that we’re trying to understand,” began Badri. “Especially since in January, all of the stocks that are indexed to 5G started to take off. The one group of stocks that have not taken off yet are data centers. And we’re going to explain that in the mid-section of this [presentation].”

“So…how will telecom service providers achieve their 5G aspirations and when will data centers see the initial effects of 5G deployments?” he asked the room of 400+ attendees. “It’s very easy to say that the sector will benefit, but in reality, it needs to be measurable if it’s going to actually gain from it.”

Badri then shared that, in order to make his research more robust, he made the case about a year ago that he should be covering the technology space as well as the data center space. “This way, any engineering developments that are occurring in the space from a technological perspective, I can actually learn from on the engineering side…and anything that is going to be put into effect,” he explained. “As Alan [Tucker, JLL] pointed out earlier in his remarks, Arista Networks is probably one of the best barometers for finding out what is going on in data centers. Because they manufacture the network switches that go into the majority of the data centers. So that’s why I view them as essentially a leading indicator for the majority of my research.”

Sami Badri, Senior Analyst, CreditSuisse

“We’re not going to get into a lot of 5G jargon. But the bottom line is that maybe 5-10 years ago, if you wanted to download a 1-gigabyte or 500-megabyte file to your phone, it would maybe take you a couple of days, depending on your wireless connection,” he recalled. “Now in the 5G world, by 2020, a 5-gigabyte video should only take you about a couple of seconds. And that is the progression that we’re going through….you went from 1G all the way back in the 1980s to 5G, where the new parity is that a significant amount of data will be downloadable. But once again, a lot of nuance is in this.”

Next, Badri shared some data from the field. “The biggest use case, that seems to be the most recurring, is that a lot of people think that 5G is going to be an edge play. It is going to be an edge play. But in reality, what everyone is ultimately trying to solve for is enhanced broadband,” Badri revealed. “To back this [up], we actually ran a survey at Credit Suisse. And we actually surveyed two different types of people. We surveyed commercial use cases – what the telcos wanted to do, and then the engineers, who were actually working behind the scenes — to figure out what exactly they were trying to achieve with 5G technology.”

Interestingly enough, according to Badri, everyone simply wanted faster internet for commercial use cases. “For the consumers, all the way down to the office use cases, and even think about autonomous vehicles and their consumption of data, everyone just wanted drastically more internet connectivity and bigger magnitudes.” Badri outlined. “Other things that came up include real-time gaming. If you play Fortnite, good for you. I have yet to open it. And then on the technical side, the biggest cases are for ultra-low latency. And that’s mainly to do with application use cases and applications in general.”

“So for example, if you’ve ever been on your phone and hit refresh on your news feed, and it didn’t actually work, there is probably a 99% chance that you’re going to close that applications and do something else,” asserted Badri, wrapping up the opening remarks of his session. “You probably do this without even realizing it. And that is the reason why engineers have essentially said that low latency is by far the most important use-case for rolling out 5G.”