The global data center colocation market size is expected to grow from USD 41,490 million in 2020 to USD 101295.8 million by 2027, at a CAGR of 13.6% from 2021 to 2027. Data center colocation is defined as a data center facility in which a business can rent space for servers and other computing hardware. The physical infrastructure includes data center equipment such as rack and cage, cooling equipment, power equipment, networking equipment, and others used for colocation services. Colocation services include services in which hardware space and networking bandwidth are rented to organizations that need a system at a lower cost.
The market is driven by a significant rise in big data and the increased adoption of cloud-based services owing to flexibility and cost-effectiveness. The companies are adopting colocation services to enhance the flexibility and scalability of their business effectiveness and efficiency. Furthermore, major companies manage their business data through the data center colocation as the arrangement of an infrastructure facility includes the high cost that propels enterprises to shift to data center colocation services. Data center colocation is considered a secure platform with cost-saving potential and the capability to enhance performance and security. Due to these benefits, data center colocation is significantly preferred in several application sectors such as banking, financial services and insurance (BFSI), government, and aerospace and defense.
The global data center colocation market has witnessed significant growth over the decades. The major factors contributing to the growth of the market include the increasing adoption of cloud-based services and rising concerns about data security and privacy. The market is segmented based on solution type and vertical. Among solution type, the market is further classified into retailer colocation and wholesale colocation.
Strategically implemented and paired with skilled human oversight, technologies such as IoT, AI, and big data can produce a multitude of new efficiencies for the data centers. According to Gartner, an estimated 30% of the data centers that fall short of adequately preparing for such technologies will no longer be operationally feasible in 2020. In light of this stat, IT giants requiring data centers will certainly invest in a solution that will assist them in making the most of these technologies, which is anticipated to ultimately drive growth to the data center colocation market. Predictive analytics to optimize the workload distribution, machine learning algorithms to cool things down for improved data energy efficiency, and AI to mitigate staffing shortages and have increased substantially in the data centers.
A considerable rise in big data is the primary concern for enterprises to safely store and manage huge amounts of data. With increasing digitalization globally, big data is on a continuous rise. According to the World Economic Forum, the connected world is producing data at an unprecedented pace in human history. Presently, data is no longer utilized for covering past activities; it is helping the manufacturers in predicting risk, improving customer experience, predicting the future, and understanding their extended value chain. For data tracking and capture, manufacturers have access to more resources.
There are a few concerns linked with retrieving data from backups in a data center, including setting a recovery time objective (RTO), decreasing data and data management, security risks, and retrieval testing. Due to an uncertain event, when regular production data is lost or destroyed, the backup is all that stands in between the company/organization getting recovered or bankrupt. The objective of backups is not only about creating a copy; it’s also about timely recovery. Security risk is another potential concern as securing the data of any company or organization into the data center with no security losses and breaches can be difficult at times. It is not easy to retrieve data from physical damages in the data center. In addition, damages to the magnetic area of storage devices in the data center complicate the procedure of data loss recovery. It is not required to make any blunders while recovering the data, which can complicate the process of data recovery. Therefore, some organizations employ technological professionals to perform the task and avoid such complications in data recovery.
To prevail in an increasingly competitive market, data center colocation providers could collaborate with cloud companies and provide their services to tap a broader customer base. They can offer added amenities, including firewall management and interconnection, to differentiate their services from others. These facilities could diminish upfront costs for colocation consumers, thus making colocation data centers more attractive. Expansion of major cloud and colocation companies to new geographies has made it possible for cloud providers and colocation companies to partner. Hybrid cloud is becoming increasingly widespread, and thus organizations require a functional solution that assists in obtaining the advantages of strategic workload allocation. With the rise witnessed in colocation, organizations now have the prospect of creating hybrid cloud environments to splurge penny for in-house data centers. Through the partnership, the reliance on-premises private cloud servers can be reduced significantly, and firms can accumulate a strong portfolio of the private servers handled by a skilled colocation provider. Such partnerships can assist in maintaining a huge presence in the market for small and mid-sized organizations, enabling them to take advantage of everything that the cloud approach can offer.
The study categorizes the data center colocation market based on solution, end-user, and regions.
Based on the solution type, the market is further bifurcated into retail colocation and wholesale colocation. The retail colocation segment had the largest market share of 74.4% in 2020, and it is expected to register a significant CAGR from 2021 to 2027. Retail colocation is influenced by many factors such as the need for small space for a limited time, the need to store a small amount of data in different geographies, or when the company has reached other on or off-site facility data limits and need a bit more space. Retail colocation aids in lowering the cost of operation. The company also prefers retail colocation when it lacks time and staff management or maintenance on its own.
Additionally, when the company does not plan to expand its business or offers any time soon, it opts for retail colocation. Retail colocation assists in improving data security, decreasing management, and lowering the overall power expenses. The power consumption rate is the primary factor that decides whether the deployment is good for the retail environment or needs to move into other settings such as wholesale and cloud storage. The limit set by the data center for the distribution between retail and wholesale varies significantly. For instance, some providers consider deployment over 100 KW as a wholesale, whereas others set the cut-off at 500 KW or, in some cases, even higher as 1 MW.
Asia Pacific accounts for the highest CAGR during the forecast period
Based on the regions, the global data center colocation market has been segmented across North America, Asia-Pacific, Europe, South America, and the Middle East & Africa. Globally, Asia Pacific is estimated to hold the highest CAGR of 14.4% in the global data center colocation market during the forecast period. China, India, Japan, South Korea, Australia, Southeast Asia, and the Rest of Asia-Pacific are some countries in the Asia Pacific Region. The growth of the Asia Pacific region is primarily due to strong economic growth in the domestic emerging countries such as China, Indonesia, Malaysia, and India.
In the Asia Pacific, China's data center colocation market is estimated to grow at a CAGR of 14.8% from 2021-2027. In the Asia Pacific, China is the leading country that contributes to the growth of the data center colocation market. The factors that augment the market growth include the availability of a large amount of enterprise data coupled with the rising concern regarding data security and recovery in large and small enterprises. With the rapid development of cloud computing, the internet, mobile internet, and big data applications, building a global data center is accelerating. Moreover, China has many small and large companies that make ample opportunity for data center colocation solutions.
The data center colocation market is mildly concentrated in nature with few numbers global players operating in the market such as NTT Communication Corporation, Digital Realty Trust, Inc., Cyxtera Technologies, Inc., Equinix, Inc., CyrusOne Inc., Global Switch, CoreSite Realty Corporation, AT&T, Inc., China Telecom Corporation Limited, Verizon Enterprise Solutions, Inc.
Frequently Asked Questions
Want to Review Complete Market Research Report
Budget constraints? Get in touch with us for special pricing
Request for Special PricingCustomize this Report
Related Reports
Student Loan Servicing Market 2022: Industry Size, Emerging Trends, Regions, Growth Insights, Opportunities, and Forecast By 2033
Mar 2024Lab Automation Market 2021: Industry Size, Regions, Emerging Trends, Growth Insights, Development Scenario, Opportunities, and Forecast by 2027
Mar 2024Retail Automation Market 2022: Industry Size, Regions, Emerging Trends, Growth Insights, Opportunities, and Forecast By 2030
Mar 2024Mobility As A Service (Maas) Market 2023: Industry Size, Emerging Trends, Regions, Growth Insights, Opportunities, and Forecast By 2033
Mar 2024Web 3.0 Blockchain Market 2022: Industry Size, Emerging Trends, Regions, Growth Insights, Opportunities, and Forecast By 2033
Mar 2024