The Global market for data center colocation is forecast to reach $61.27 billion by 2025, growing at a CAGR of 12.3% from 2020 to 2025. The market growth is attributed to the factors such as growing data centers, technological developments, growing expenditure through regulated cloud providers and colocation networks and others. Moreover, rising adoption of IOT devices, edge computing and others boosts the market growth.
By Type- Segment Analysis
Wholesale colocation segment held the highest market share of data center colocation in 2019. Moreover, it is anticipated to witness the significant market growth during the forecast period 2020-2025. The wholesale data center location market is increasingly important because it offers higher availability, avoids technical glitches, strategic value and decreases the overall inventory costs. The wholesale data center placement market is becoming increasingly common because it provides higher capacity, prevention of service interruptions, strategic positioning, and lowered average ownership costs. Owing to the rising phenomenon of cloud adoption, the market for solely managed data centers has declined. Moreover, with growing volume of files, the growth of current data centers would take up a lot of room in the premises. Wholesale data centers reserve data center facilities within a spectrum of 10,000 to 20,000 square feet. A wholesale colocation customer requires additional room such that they can be equipped with a private enclosure, a private suite or even a build-in suite to fit the ways with which the extension or existing data center facility is designed or constructed to accommodate their needs. The goal of a wholesale placement room separate from other clients is to insure the protection of the IT facilities in a multi-tenant data center facility. Most wholesale placement customers demand 500 kW or more of total electricity, but this number may fluctuate. Many placement providers begin by specifying the total available power specifications of the consumer. Wholesale placement providers that have pricing choices, such as per kW, MW, or kVA, as well as providing metered or sub-metered power rates. Metered capacity provides greater versatility in prices as demand demands are complex.
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By Organization size- Segment Analysis
Data Center Colocation Market is segmented into Small enterprise, Medium enterprise, large enterprise on the basis of organization size. The Large enterprises segment is anticipated to witness the highest market share during the period 2020-2025. Commoditization and ever-increasing data center architecture changes have tilted the balance in favour of outsourced colocations. Colocation services have the facilities construction experience and pricing capacity by economies of scale. This results to provide electricity, energy and cooling at rates that individual businesses who develop their own data centers cannot access. Consequently, colocation service providers operates their facilities considerably more effectively. The return-on - investment model no longer supports businesses that are developing their own vital project facilities. Another major driver for the new IT network is the drastic rise in demand for higher power densities. Virtualization and the continuing push to accommodate more workloads within the same footprint have created problems for existing data centers designed for the purpose. From a TCO (total cost of ownership) viewpoint, the expense of retrofitting an existing building with the electricity and cooling systems required to meet network demands is significantly greater than the cost of utilizing new colocation facilities. These two considerations have tilted the scales in favor of colocation for all but the very biggest installations — businesses including Amazon, Apple, Google , and Microsoft.
Geography - Segment Analysis
APAC region is anticipated have the significant market growth during the forecast period 2020-2025. The market growth is owing to growing digitization, industrialization technological developments, growing data centers and others. Moreover growing IT & Telecom segment is dominating the data center colocation market. This is due to the increasing digitalisation and introduction of technologies such as big data and cloud in this field. Such developments pose a high challenge to data storage and availability. Companies are advocating for better data storage, networking and IT infrastructure to effectively cater for demand. During the forecast period, that implementation of converged and hyper-converged systems and virtualization is expected to raise the rack power density to an average of 8–10 kW. Leading operators are designing creative architectures capable of promoting rack power density development and satisfying diverse market demands in the coming years. Integrating facilities with power and cooling systems that support rack capacity of up to 40 kW and liquid immersion cooling that support capacity of up to 200 kW would turn the demand for APAC colocations. Equinix, Inc. confirmed the launch of its eleventh IBX TY11 data center in Japan in July 2019. It has introduced energy-efficient lighting systems, adaptive control systems that minimize power consumption, and improve cooling efficiency by active airflow management, and cold aisle containment that reduces energy consumption and boosts cooling. In February 2018 Equinix completed a USD 800 million debt and cash deal from ASB Real Estate acquisitions to Infomart Dallas Colocation Data Center with its operations and tenants.
Drivers – Data Center Colocation Market
Better Uptime Reliability
Uptime flexibility can vary from provider to provider, but if the facility has a strong track record, this could be one of the excellent advantages of colocation. For example, a colocation data center with an established record of > 99,99999 percent uptime reliability encounters less than 3.15 seconds of downtime over the course of a year.
Improved Resource Allocation
The outsourcing of data center services to a colocation facility frees up precious IT power, enabling a company to rely more on research and development rather than on an ongoing basis learning the ins and outs of its network. Money that may have been invested on running a data center might go into market analysis or product creation, providing additional ways for corporations to make the most of their current capital and achieve their business objectives.
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Challenges – Data Center Colocation Market
High installation cost
Constructing a private data center is clearly a major capital investment, but after the building is finished the expenses will not end. The day-to-day operation of a data center incurs a substantial amount of recurring maintenance costs. Colocation hosting needs higher start-up costs than if the hosting firms hire servers. They have to buy hardware and upgrades on their own. Instead of bandwidth, budgeting gets frustrating with fluctuating monthly leases. Maintenance limitations on time or money.
Market Landscape
Partnerships and acquisitions along with product launches are the key strategies adopted by the players in the data center colocation market. As of 2019, the market for data center colocation market is consolidated with the top players including Equinix, Inc., Rackspace, Interxion Holding NV, CenturyLink Technology Solutions, Navisite, Inc., Verizon Communication Ltd, NTT Data Corporation, Global Switch Corporation, KDDI Corporation, Digital Reality and among others.
Acquisitions/Technology Launches/Partnerships
In July 2019, INTERXION HOLDING NV has confirmed that it has been appointed as a placement provider for the NVIDIA DGX-Ready Data Center system. Interxion is also one of the first of a growing generation of European partners to bear this award. The software provides a certified network of artificial intelligence (AI)-ready data center solutions for clients operating an AI architecture based on NVIDIA DGX platforms.
In October 2019, Adani Group ('Adani'), India's $13 billion multinational corporate empire, has revealed today that it is collaborating with San Francisco-based Digital Realty (NYSE: DLR), the world's largest regional supplier of data center, positioning and interconnection solutions.
Key Takeaways
In developing countries construction of IT infrastructure is driving the sector. Increasing development of hyper scale facilities with a production capability of more than 50 MW would intensify the need for advanced business infrastructure globally in developing countries over the next few years.
APAC region is anticipated to dominate the global data center colocation market in the forecast period 2020-2025 owing to growing digitization, technological developments, strategic collaborations and others.
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