Over the recent years, the global data center colocation market has been witnessing remarkable pace of growth owing to the increasing complexity of managing humongous data centers and the shortcomings with regards to power and space. In addition to this, the emergence of the Internet of Things along with the rapid proliferation of big data and cloud technologies has compelled several business verticals to focus on planning the physical infrastructure of IT-based services. Moreover, large enterprises and SMEs are increasingly shifting to colocation hosting as building a new facility requires a large amount of initial investment, thereby boosting the revenue scale of data center colocation industry.
The process of hosting an onsite facility requires skilled employees to run the operations. It also involves expenditure on infrastructure maintenance and server management. In addition, setting up a new facility increases the overall CAPEX of enterprises and requires a large amount of initial investments. This has led to SMEs and large enterprises increasingly switching to colocation hosting, thereby driving the data center colocation market demand. These service providers offer several services such as skilled managed IT services, internet solutions, and interconnection services based on enterprise requirements.
The wholesale data center colocation market is anticipated to showcase a growth of nearly 17% CAGR over the forecast timespan. These providers rent the entire constructed facility to customers. They usually serve large-scale enterprises and rent out the data center space that ranges between 10,000 – 20,000 sq. feet or larger along with the cooling & power infrastructure. Several multinational enterprises that need to store a massive amount of data are dependent on these providers. The enterprises are responsible for bearing the costs that are associated with the power, capacity, network connectivity, and internal staff.
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Wholesale users benefit from economies of scale as the services provide reduced cooling and power costs in comparison with retail colocation. Such factors are encouraging several large-scale industries to establish their facilities in the space offered by these players, thereby accelerating the data center colocation market growth.
The energy sector is expected to witness a high adoption of these services due to the increasing requirements for effective storage facilities for high-performance computing, data transfer & processing, and back-up. The companies operating in this sector are partnering with data center colocation market players for improving the efficiency in these data management tasks. For instance, CyrusOne is offering its flexible & scalable solutions and services to oil & gas companies. The company partnered with Enbridge Energy, a natural gas distribution enterprise, to manage the critical industrial data and other additional IT facilities that are used for storing such information. Increasing dependency on such services is propelling the data center colocation market growth.
The adoption of these infrastructure facilities in European countries is growing at a rapid pace owing to the presence of the major data center colocation market players operating in the region. For instance, Equinix, Inc. has established about 21 infrastructure facilities in Europe. The company has overall 250,000 square meters of colocation space in the region. The overall facilities in the region account for 1,150 in 23 countries with the UK having 250 facilities. The UK is the largest market in the region with an overall 840,000 m2 of the facility space, followed by Germany accounting for 509,000 m2 of the space. Such a rapid increase in the area of the infrastructure facility is providing an impetus to the data center colocation market growth.
Driven by a widespread application segment which includes retail, IT & telecom, manufacturing, healthcare, government & defense, energy, and BFSI, the data center colocation market is set to garner commendable proceeds from various geographies in the upcoming years. Additionally, the drastically changing technology trends and the favorable impact of big data, IoT, and AI on cloud infrastructure would further open up new opportunities for the companies partaking in the data center colocation industry, which is slated to surpass USD 90 billion by 2024.