Published: May 2020 | Report Code: IM11681 | Available Format: PDF | Pages: 172
Retail Colocation Is More-Profitable Solution in Data Center Colocation Market
From $42.1 billion in 2019, the global data center colocation market size is projected to increase at a CAGR of 14.8% during 2020–2030. The key reasons behind the rising demand for such services are the high costs of maintaining private data centers, rapid surge in the volume of data being created, swift adoption of cloud on-ramp, and financial- and disaster-mitigation benefits of data colocation. In such a model, a company can rent the space and bandwidth of a data center to house its information technology (IT) hardware, data, and servers.
Segmentation Analysis of Data Center Colocation Market
Presently, the retail colocation bifurcation, under segmentation by type, generates higher revenue in the market, as such solutions allow service providers to serve a large number of customers with on-site staff, carrier and cloud connectivity, and managed services. Such services are majorly availed by companies which do not deal with massive amounts of data, have no plans for data expansion, and need limited storage for a limited time. Moreover, retail colocation services are available at lower costs, which is beneficial for customers who do not have a large budget. Further, such a model allows companies to store their data at multiple centers, in multiple regions, countries, or states/provinces around the world.
Small- and medium-sized enterprises (SME), on the basis of organization, will witness faster rise in the adoption of data colocation services in the coming years. This is credited to the lower spending power of such firms, which renders them unable to maintain their own data center. In addition, as they work with significantly lesser data as compared to large enterprises, therefore require less storage space, colocation solutions offer them several financial benefits.
In the immediate future, the demand for data center colocation solutions will be the highest in the IT and telecom sector, based on vertical. Due to the rapid adoption of improved technologies, including artificial intelligence (AI), internet of things (IoT), and cloud computing, the amount of data being generated is witnessing a sharp surge. This is why IT and telecom companies are quickly taking data center space on a rental basis, to securely store and manage this voluminous data and scale the storage capacity up and down, as per requirement. Apart from their advantages of low capital and operational costs, data colocation centers allow for high-speed data transmission, which makes them popular with IT and telecom firms.
The most rapid adoption of such solutions is expected to be witnessed in Asia-Pacific (APAC) in the years to come, as the IT and telecom and healthcare sectors in the emerging economies of the region are undergoing swift developments. A large number of IT firms from around the world outsource their processes to APAC-based companies, which is already leading to a rapid rise in the demand for temporary server and data storage space. Further, the cost of internet protocol (IP) transit, space, and electricity is rather high here, which makes it tough for regional companies to maintain their own data centers, thus contributing to the surging demand for colocation services.
Green Data Centers Are Most Prominent Market Trend
The most prominent trend in the data center colocation market is green data centers. Owing to the concerns regarding air pollution, as a result of the emission of greenhouse gases (GHG) from industries, the focus on attaining maximum energy efficiency is quite strong around the world. This is leading to the growing popularity of green data centers, which offer the same benefits and functionalities as a conventional facility, but at significantly lower electricity consumption. By using ENERGY STAR-rated power supply systems, and energy-efficient heating, ventilation, and air conditioning (HVAC) equipment, centralized humidification systems, light-emitting diode (LED) lighting, routers, and servers, such facilities are able to save a significant amount of energy, thus resulting in numerous environmental benefits.
High Private Data Center Costs Are Strongest Market Driver
The key factor driving the growth of the data center colocation market is the high costs associated with maintaining private data centers, especially for companies where the amount of data being generated is not consistent. With rapid digitization and adoption of IoT and AI, huge amounts of data are being generated, which needs to be stored and managed efficiently and cost-effectively. Constructing a private storage facility can cost as much as $200 per square foot, in addition to the $10,000 per mile spent on fiber cabling. While large enterprises can afford all this, SMEs often can’t, and those SMEs that use cloud computing do not need to invest so much. Thus, owing to the numerous cost advantages of data colocation centers, they are becoming popular around the world.
Edge Data Center Colocation Spaces Present Market a Promising Future
Players in the data center colocation market can make the most of the opportunities being presented by the increasing demand for edge data centers. These are small data colocation facilities, close to the companies they cater to with cloud computing resources and cached content. These centers, in turn, are connected to larger ones or multiple facilities, which process the data centrally via analytics and machine learning and offer cloud computing services. Due to the rapid IoT usage, deployment of 5G network, increasing data gap, and adoption of network function virtualization (NFV), software-defined networks (SDN), augmented reality (AR)/virtual reality (VR), and video streaming, the edge data center market is predicted to triple in size during 2017–2024.
|Market Size by Segments||Type, Organization, Vertical|
|Market Size of Geographies||U.S., Canada, Germany, U.K., France, Netherlands, Italy, Russia, Spain, Poland, China, Japan, India, Singapore, Australia, Brazil, Mexico, Argentina, Chile, Colombia, South Africa, Saudi Arabia, U.A.E.|
|Market Players||Equinix Inc., Digital Realty Trust Inc., China Telecom Corporation Limited, KDDI Corporation, CyrusOne Inc., Cyxtera Technologies Inc., NTT Communications Corporation Ltd., CoreSite Realty Corporation, China Unicom (Hong Kong), Global Switch Holdings Limited, InterXion Holding N.V., Internap Corporation, Cogent Communications Holdings Inc., Keppel Data Centres Pte Ltd., Rackspace US Inc., Verizon Enterprise Solutions Inc.|
Facility Expansions Helping Companies Increase their Revenue
In recent years, several companies in the data center colocation market have expanded their facilities, in order to cater to a larger number of customers with more storage space than before.
For instance, in April 2020, Digital Realty Trust Inc. inaugurated its third data center in Singapore, named Digital Loyang II (SIN12). This 50 megawatt (MW) facility is a reflection of the efforts of the company to deploy critical infrastructure on PlatformDIGITAL around the world.
Similarly, CoreSite Realty Corporation added DC2, a new data center colocation facility, at its Washington, D.C. campus in February 2019. Complementing its existing interconnected campus environment, the new facility offers companies the network of over 90 domestic and international carriers, while to cloud providers, it offers native cloud on-ramps.
The major players in the global data center colocation market are Equinix Inc., Digital Realty Inc., China Telecom Corporation Limited, NTT Communications Corporation Ltd., KDDI Corporation, China Unicom (Hong Kong) Limited, CyrusOne Inc., Cyxtera Technologies Inc., CoreSite Realty Corporation, Global Switch Holdings Limited, InterXion Holding N.V., Internap Corporation, Cogent Communications Holdings Inc., Keppel Data Centres Pte Ltd., Rackspace US Inc., and Verizon Enterprise Solutions Inc.
Data Center Colocation Market Size Breakdown by Segment
The data center colocation market report offers comprehensive market segmentation analysis along with market estimation for the period 2014–2030.
Based on Type
Based on Organization
Based on Vertical
The CAGR of the data center colocation market till 2030 will be 14.8%.
The IT and telecom vertical generates the highest revenue in the data center colocation industry.
APAC will witness the fastest data center colocation market growth.
The strongest factor driving the data center colocation industry is the high costs associated with private data centers, especially when an inconsistent amount of big data is being generated.
Facility expansions currently characterize the competitive landscape of the data center colocation market.
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