Data Center Colocation Market 2020 and Forecast 2021-2027

  • TBI367717
  • November 05, 2020
  • Global
  • 135 pages
  • IFF Market Research

Report Overview: Data Center Colocation Market

The global data center colocation market size was valued at USD 30.20 billion in 2020 and looks set to grow at a compound annual growth rate (CAGR) of 12.8% from 2021 to 2027. Colocation service providers provide shared spaces to enterprise businesses in order to store their data storage equipment and other related devices. In addition to space and infrastructure, colocation centers provide physical security, networking services, and cooling and power components required in the data centers. Enterprises are required to provide only servers and storage devices, which reduce the additional overheads. Thus, the market is primarily driven by the benefit of eliminating the capital spending (CapEx) associated with buildings, infrastructure, power and cooling equipment, and maintenance of the data centers. Apart from saving the capital spending of enterprises, data center colocation offers several benefits that lure the customers. Uptime reliability is one of the most prominent benefits of adopting colocation services. The colocation centers are built with high specifications for redundancy, and thus they are often up and running as compared to private data centers. Additionally, adoption of colocation data centers translates to lower costs, fewer technical staff, easy scalability, and predictable monthly or yearly expenses. Owing to the above-mentioned benefits, the market is anticipated to witness steady growth in the next few years. The growing volume of data from social media and OTT platforms has augmented the demand for data centers and colocation services. The number of active users on social media is rising exponentially, and thus contributing to the growing data from these platforms. For instance, the total number of daily active Facebook users in 2018 rose to approximately 1.52 billion as compared to 1.22 billion in 2016. The number of social media users is estimated to rise even more in the coming years, which, in turn, is anticipated to generate the demand for colocation centers. The telecommunication industry is one of the most significant contributors to the market growth. Colocation data center’s ability to provide high connectivity by just plugging into their services helps telecom operators to expand their reach more quickly and easily. The advent of 5G services has led to increased demand for data centers as the network service providers’ current data center infrastructure is unable to suffice the demand. Thus, the demand for colocation centers from the telecom sector is anticipated to rise in the coming years. Rising adoption of cloud data centers owing to their lower costs is expected to act as an inhibitor to the market growth. Smaller organizations are increasingly adopting cloud services as they offer scalable low costs, there is no need of an IT staff, and have comparatively fewer overheads. However, the colocation centers offer cost benefits in the long run and also offer flexibility in terms of total server control. Owing to the aforementioned features, enterprises are still adopting colocation services.

Colocation Type Insights: Data Center Colocation Market

In terms of revenue, the retail colocation lead the market with a share of 73.69% in 2019. Retail colocation allows enterprises to rent a set of space within a data center. Owing to the option of renting limited racks for a limited time, retail colocation offers various advantages, such as flexibility in terms of infrastructure, for managing the small volume of data or requirement of infrastructure for a limited period. It is beneficial for small scale organizations as their requirement for data storage is limited as compared to large organizations. Moreover, retail colocation is highly suitable for companies having a limited budget and want to take advantage of colocation services. The wholesale colocation segment is anticipated to expand at the fastest CAGR of 16.2% from 2021 to 2027. This growth is attributed to the rising need for data centers for organizations operating in multiple regions and that have a broad customer base. These companies have a large volume of data to be stored and require large commercial space for accumulating their servers. Furthermore, hyper-scale cloud service providers such as IBM Corporation and, Inc. have leased wholesale data centers in the U.S. This trend is expected to continue with the increasing adoption of cloud technology.

Enterprise Size Insights: Data Center Colocation Market

In terms of revenue, large enterprises lead the market with a share of 63.20% in 2019. This is attributed to the rising demand for data centers among large organizations to maintain and manage data efficiently. Large enterprises from various sectors operate globally and generate large volumes of data, which requires infrastructure with high storage capacities. Unlike small and medium enterprises (SMEs), these organizations do not have budget constraints and are willing to spend more on data storage. The SMEs segment is estimated to expand at the fastest CAGR of 15.5% during the forecast period. This is attributed to an increasing number of SMEs in developing countries, such as India and China. Moreover, SMEs have financial limitations due to which cost reduction becomes a major factor for the organization’s growth. The adoption of colocation services plays a key part in reducing costs associated with building infrastructure and other related services.

End-Use Insights: Data Center Colocation Market

Based on end-use, the market is segregated into IT and telecom, retail, BFSI, healthcare, media, and entertainment. In terms of revenue, the IT and telecom segment lead the market with a share of 26.58% in 2019. The segment is anticipated to maintain its lead in the near future due to the rising number of mobile internet users. According to the GSM Association (GSMA), in 2018, about 300 million people connected to the mobile internet for the first time due to which the total population connected over mobile internet was more than 3.5 billion. This number is bound to rise due to the increasing adoption of smartphones with advanced features. The healthcare segment is expected to expand at the fastest CAGR of 17.4% from 2020 to 2027owing to increasing technological advancements in the hospital industry. Additionally, certain government regulations such as the American Recovery and Reinvestment Act in 2014 have made it essential for public and private healthcare service providers in the U.S. to maintain electronic health records of patients. This has led to the need for data storage solutions among healthcare service providers. The growing volume of patient data across the globe is anticipated to increase the adoption of colocation services in the healthcare sector.

Regional Insights: Data Center Colocation Market

North America lead the market for data center colocation with a share of 42.01% in 2019. This is attributed to the presence of major market players in the region, such as Digital Realty Trust, Inc., Equinix, Inc., Cyxtera Technologies, Inc., and CyrusOne Inc. Moreover, increasing e-commerce sales in the U.S. is fueling market growth. Retailers are significantly investing in their IT infrastructure for storing customer data, which can be used for identifying customer buying patterns and product demand based on various categories, such as region, gender, and age group. Asia Pacific is estimated to expand at the fastest CAGR of 17.3%over the forecast period. This growth is attributed to the escalating number of internet users in the region. For instance, according to the World Bank Group, in 2017, 34.45% of the population India had access to the internet as compared to 22% in 2016. This has led to an increase in the volume of digital data, and in-turn led to organizations from various sectors in need of data centers.

Key Companies & Market Share Insights: Data Center Colocation Market

The market is fragmented and characterized by intense competition. These companies are focusing on enhancing their market share by adopting inorganic growth strategies, such as partnerships, acquisitions & mergers, and collaboration. For instance, in March 2020, Digital Realty Trust, Inc. announced the acquisition of InterXion with an aim to meet the demand for colocation and hyper scale requirements in EMEA, America, and Asia Pacific. These companies are also focusing on the geographical expansion of their business. For instance, in February 2020, Equinix, Inc. announced the launch of its data center in Melbourne, Australia. The data center is launched to support the demand for the government’s smart city development plans and the interconnection requirements of local customers. Furthermore, in October 2019, Cyxtera Technologies, Inc. partnered with CyrusOne Inc. to launch a new data center facility in Amsterdam. Some of the key companies operating in the global data center colocation market include:

Key companies Profiled: Data Center Colocation Market Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities from 2016 to 2027 in each of the sub-segments. For the purpose of this study, Trusted Business Insights has segmented the global data center colocation market report based on colocation type, enterprise size, end use, and region:

Colocation Type Outlook (Revenue, USD Billion, 2016 - 2027)

  • Retail Colocation
  • Wholesale Colocation

Enterprise Size Outlook (Revenue, USD Billion, 2016 - 2027)

  • SMEs
  • Large Enterprises

End-use Outlook (Revenue, USD Billion, 2016 - 2027)

  • Retail
  • BFSI
  • IT & Telecom
  • Healthcare
  • Media & Entertainment
  • Others

Table of Contents
Chapter 1. Methodology and Scope
    1.1. Research Methodology
    1.2. Research Scope & Assumptions
    1.3. List of Data Sources
    1.4. List of AbbreviationsChapter 2. Executive Summary
    2.1. Data Center Colocation Market - Industry Snapshot & Key Buying Criteria, 2016 - 2027
    2.2. Data Center Colocation Market, 2016 - 2027 Chapter 3. Data Center Colocation Industry Outlook
    3.1. Market Segmentation     
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