Data Center Colocation Market Size By Type (Retail Colocation, Wholesale Colocation), By End-Use (SMEs, Large Enterprises), By Application (BFSI, Energy, Government & Defense, Healthcare, Manufacturing, IT & Telecom, Retail), Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2019 – 2025

Industry Trends

Data Center Colocation Market size was over USD 40 billion, globally in 2018 and is estimated to grow at around 14% CAGR between 2019 and 2025.
 

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Data center colocation refers to process of renting out physical space, network bandwidth and other resources by an organization within an existing data center. The process enables sharing of exiting data center resources for deploying and hosting data center services for external organizations. The growing need to expand, move or consolidate data centers is encouraging companies to shift towards colocation services for reducing cost and increasing operational reliability and security.
 

The rising data traffic and the need for efficient systems for managing massive data are encouraging companies to rent out the IT space for their servers and storage devices, driving the data center colocation market growth. In 2013, it was estimated that there were around 2.5 billion internet users globally including 250 million in the U.S. alone. The rising adoption of smartphones and wearable computing technologies in the country is driving the need for real-time data storage, processing, and access facilities. Data center systems are being integrated with sensors, networked capabilities, and IoT technology, offering an additional state of data proliferation. Companies are investing heavily to manage such massive data with in-house data centers. They require services that can allow them to manage their IT devices in a data center space, where management or installation costs are being undertaken by a third-party.
 

Increasing investments in upgrading and transforming traditional or small IT facilities to mega facilities is being witnessed. The construction of new projects and facility modernization are transforming the IT infrastructure framework into highly automated facilities. This has led to an increase in the size and number of electrical devices in an IT environment and in the overall expenses that are involved in maintenance, management, and installation of large-scale facilities. Companies are dependent on these colocation service providers for reducing such expenses. Colocation players help companies by offering IT space and several services such as maintenance and asset management, reducing additional expenses in recruiting IT personnel.
 

Data center solution providers are offering several software technologies and equipment to colocation service providers. The data center colocation industry players are engaged in designing solutions that are specifically designed for service providers. For instance, Schneider Electric SE is offering DCIM, critical facilities management, digital services, and critical power & cooling services. IT room solutions involved in colocation solutions include integrated IT solutions, racks, and enclosures, rack power distribution, UPS, etc. These technology providers are partnering with colocation companies to provide an effective supply of IT devices and solutions in their data center space. Similarly, Nlyte is offering DCIM solutions to colocation providers that will help them to run their data center facilities at peak efficiency.
 

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High demand for wholesale colocation services owing to the rising need for high bandwidth and need to reduce total cost of ownership

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The market for wholesale colocation services is witnessing growth as a result of the increasing demand for large-scale clouds, secure space, and powerful data centers for power resiliency and building efficiency from large firms for their IT environments. Wholesale colocation data center market is becoming popular as they offer higher bandwidth, mitigation of service interruptions, strategic colocation, and reduced total cost of ownership. The requirement of exclusively owned data centers has reduced owing to the growing trend of cloud adoption. Moreover, with the increasing amount of data, the expansion of existing data centers takes up plenty of space on the premises. Wholesale data centers rent data center space in a range of 10,000 to 20,000 square feet. Hyperscale cloud service providers are at the forefront of adopting colocation services.
 

Growing development of IT infrastructure facilities

In the data center colocation market, large enterprises are opting for the colocation services as a result of increasing complexities in data management. These enterprises are engaged in developing their own IT infrastructure facilities in their global business base, which is substituting the adoption of colocation services. The companies are investing large amounts of money for establishing these mega IT facilities. Large enterprises not only have their own data centers but are also renting out leased space in colocation data centers for better management. Accomplishing tasks, such as replacement of disk drives, OS updating, patching, and monitoring, require highly skilled staff that cannot be accomplished in in-house data centers. Managed services are highly popular among large enterprises owing to increasing deployments of hyperscale data centers. This enables organizations to reduce the cost and increase their operational efficiency.
 

Rising need to store and process massive data generated in e-commerce sector globally

Online shopping is gaining traction owing to the increasing replacement of traditional brick & mortar stores with online stores that offer enhanced shopping experience. The increasing number of online transactions will drive the requirement of high-quality data storage for fast data processing. Retailers are leveraging big data to optimize e-commerce shopping options to attract more mobile consumers. Exponential growth in the e-commerce sector has propelled companies to invest in colocation services for 24/7 guaranteed server resources and a safe environment for online transactions. A reliable IT infrastructure is required to aid the increasing number of retail applications. By leveraging retail data centers and IT, retailers can meet increasing consumer demands. Such trends are driving the data center colocation market growth.
 

Ongoing expansion and construction of data centers in Europe

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Europe is the most-developed data center colocation market for colocation services with the highest density of colocation facilities being in Germany, the UK, France, and the Netherlands. There are over 1,160 colocation data centers spread over 20 countries in the region. Several European countries including Italy, Spain, and Russia are recovering from their economic crisis, providing several companies to expand in the region, driving the demand for efficient data storage techniques. FR5, Telehouse North, Paris Voltaire, PA2, and Telehouse East are some of the prominent data centers with the maximum number of service providers in the region. Moreover, technological developments, such as Industry 4.0, artificial intelligence, big data, and cloud computing, are major drivers of data center development in Germany. Frankfurt is the country’s financial, commercial, and connectivity capital. Germany contains several data center clusters providing ample opportunities to colocation providers. The data center colocation market in the country is in Hamburg, Munich, Berlin, Dusseldorf, and Frankfurt.
 

Product launches and innovations remain key growth strategies

The colocation companies are engaged in offering innovative services that will match the requirement of their clients. Customers are availing the IT deployment & management services based on their size and business operations. Such factors provide the benefit of bargaining to colocation providers. These colocation companies are dependent on suppliers and technology providers for the delivery of many hardware component and software technologies. Key players in the data center colocation market are China Telecommunications Corporation, China Unicom, CyrusOne, Equinix, Inc., Digital Realty, Global Switch Corporation, Interxion N.V., KDDI Corporation, NTT Communications, and Singapore Telecommunications Limited
 

The data center colocation market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue in USD from 2014 to 2025, for the following segments:

By Type

• Retail colocation
• Wholesale colocation

By End-Use

• SMEs
• Large enterprises

By Application

• BFSI
• Energy
• Government & defense
• Healthcare
• IT & telecom
• Manufacturing
• Retail
• Others
• SMEs

The above information is provided on a regional and country basis for the following:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Italy
  • Poland
  • Benelux
• Asia Pacific
  • China
  • India
  • Japan
  • Singapore
  • Australia
• Latin America
  • Brazil
  • Mexico
  • Chile
  • Colombia
  • Argentina
• Middle East & Africa (MEA)
  • GCC
  • South Africa