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, 2020 – 2026

Industry Trends

Data Center Colocation Market size was valued at over USD 45 billion in 2019 and is expected to grow at a CAGR of 15% from 2020 to 2026. Large upfront costs associated with constructing, operating, and maintaining in-house data centers will fuel the market growth.
 

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The demand for data processing to support greater rack densities and scalability & flexibility is increasing among enterprises. Expansion of racks, cabinets, and cooling equipment incur huge costs to the company. The other costs involved are cost of fire suppression tools and labor cost of security personnel to maintain & repair data centers. The high cost of owning a data center is driving the demand for data center colocation services.
 

A rise in the number of SMEs adopting advanced technologies to sustain in the growing competition will propel the market expansion. Large amount of data generated by advanced technologies require expansive data center infrastructure. As businesses evolve, their IT requirements grow, in turn, stressing the need for enhanced data management solutions. Monetary and space constraints restrict these businesses from establishing data centers. Space constraints also pose a major problem in housing additional IT equipment such as racks, enclosures, and power & cooling. Data center colocation offers SMEs the scalability and flexibility needed for expanding data storage and processing requirements.
 

The coronavirus pandemic has pushed the internet usage to 70%, straining the internet’s underlying infrastructure. Global colocation services enable providers to synchronize their existing on-premises data centers with colocation facilities for quickly onboarding workloads & applications, reducing risks and minimizing costs. A rise in the consumption of digital data with educational institutions using online learning techniques to ensure social distancing will also boost the industry growth.
 

A sharp rise in the number of SMEs over recent years will spur the market demand for retail data center colocation services

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The retail data center colocation market trends in the U.S. will expand at 12% growth rate by 2026 owing to the ongoing trend of startups utilizing the latest technologies to efficiently manage their IT infrastructure. According to the State of California report, as of April 2019, there are around four million small businesses in California. Small and medium-sized businesses do not require a dedicated data center space due to limited IT requirements. Retail colocation provides them the required resources for a stipulated period, thereby offering a cost-effective data handling solution. The retail sector will witness growth led by the high demand for less upfront CAPEX with short-term flexibility.
 

Large enterprises leveraging advanced technologies, such as AI and IoT, to augment operations

The Germany data center colocation market size was around USD 1 billion in 2019 and is projected to grow at a CAGR of 14.5% through 2026 on account of the rise in the amount of digital data accumulated due to the adoption of advanced technologies by renowned automotive manufacturers. Global automotive manufacturers, such as BMW and Mercedes-Benz, are incorporating advanced technologies, such as IoT and AI, resulting in a high demand for sophisticated data center colocation services for efficient data management. The advent of Industry 4.0 in the manufacturing process in Germany will also influence the colocation data center market revenue. High demand for efficient and reliable data handling will foster the industry expansion.
 

Growing trend of retail automation to surge the market value for data center colocation solutions for handling digital data traffic

Retailers are incorporating advanced solutions, such as Point of Sale (POS) systems and electronic shelf labels, to enhance customer satisfaction and streamline store operations. For instance, ALDO Group, a Canadian retailer, uses big data analytics to target the right customers and predict emerging trends to increase sales. The use of digital technologies by the retail sector will further contribute to the rising amount of data, propelling the demand for effective data management solutions.
 

Rising popularity of social media platforms in several countries in APAC region will stimulate the market progression

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The Asia Pacific data center colocation market captured over 30% revenue share in 2019. People use social media platforms such as Instagram and Facebook to upload content online. Growing internet penetration has enabled seamless streaming of videos online, in turn, leading to huge data storage requirements. According to Linkinfluence, a social media intelligence company, as of January 2019, South Korea has had the third-highest rate of active social media users globally. Around 65% of the total population in Japan used social media services at the beginning of 2020. A rise in the amount of data traffic will impel the demand for sophisticated data center colocation services.
 

Strengthening market reach globally is a key strategy of players operating in the industry

Data center colocation companies are focusing on strengthening their reach to cater to the growing demand for efficient colocation facilities across the globe. For instance, in March 2020, Equinix, Inc. launched its fourth data center in Singapore by investing USD 74 million, providing around 4,000 square meters of colocation space. The fourth International Business Exchange (IBX) aims to support the increasing interconnectivity and growing digital transformation efforts amongst businesses in the country. The increasing penetration of digitalization globally will boost the demand for data center colocation services.
 

Major market participants functioning in the industry include China Telecom Corporation Limited, Equinix, Inc., Digital Realty Trust, Inc., Zayo Group Holdings, Inc., Cyxtera Technologies, Inc., CyrusOne, Inc., and NTT Communications Corporation Limited.
 

The market research report on data center colocation includes in-depth coverage of the industry, with estimates & forecast in terms of revenue in USD from 2016 to 2026, for the following segments:
 

Market, By Type

• Retail colocation
• Wholesale colocation

Market, By End-Use

• SMEs
• Large enterprises

Market, By Application

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

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