Why Data Center Colocation Market are Booming Rapidly? Industry in-Depth Analysis with Growing Trends || CyrusOne, Cyxtera Technologies, Digital Realty, KDDI, Global Switch, Equinix, Navisite, NTT Communications Corporation, Rackspace, and Verizon Communi

Data Center Colocation Market growth is propelled by robust demand for colocation services from SMEs and startups has enthused confidence among stakeholders. A notable surge in the number of small and medium scale businesses has propelled the growth of the data center colocation market share. So much so that high upfront costs and complexities attributed to running in-house data centers have further signified the significance of data centers.

A palpable rise in the adoption of on-demand digital services has led to a boom in data traffic. According to Ofcom’s Annual Media Nation’s report, around 50% of the U.K. households had their TV connected to the internet through 2019. Increasing trend for online services, including e-learning, digital games and streaming media during the COVID-19 pandemic underscored the industry growth forecast. According to the Media Technology Monitor (MTM), the number of users subscribing over the top (OTT) services in Canada grew by 58% during the pandemic.

In terms of revenue, the global data center colocation market will grow at a robust pace by 2026. Top trends which are likely to bolster the industry outlook are elucidated below:

Retail colocation to gain impetus

Retail colocation facilities have gained impetus from the growth of small and medium scale businesses in APAC. According to the Federal Reserve Bank of San Francisco, startups and SMEs accounted for 82% of the total employment in South Korea. An apparent shift from manual to digital service is underpinned by a robust adoption of cloud-based systems.

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Traction for the retail colocation space has become pronounced in the U.K., Germany, Italy and France. SMEs in the Europe have exhibited an inclination for the facility as they do not need a large data center, mainly due to high price of wholesale colocation services and limited data storage needs. Europe data center colocation market value will grow from soaring popularity of retail colocation spaces in the region.

Strong colocation space in North America

The U.S. is poised to witness a robust adoption of retail colocation facilities as small and large enterprises seek to bolster their IT infrastructure foothold in the region. Service providers are rendering access to public cloud providers and blended internet access services to public cloud providers and carriers.

Data center colocation industry outlook in North America is expected to remain bullish against the backdrop of expanding footprint of redundant power supply up to 100kW, 200kW, 500kW or 1MW and enhanced network security.

Demand to across the BFSI sector in America

Banking, financial services and insurance sector in North America and Europe are replete with investments in colocation services. To put this in perspective, the current trend indicates a notable inclination and need to store and process massive volumes of data in the BFSI sector.

The trend has stimulated the demand for AI, blockchain, AR/VR, biometric and cloud in the U.S. and Canada. Major revenue stream in North America is likely to stem from the BFSI sector as bandwidth-hungry apps, mission-critical systems and high-performance activities continue to demand more throughput and capacity.

Europe market for digitalization solutions

Thriving digitalization in the U.K., Germany, France, Netherlands, Russia, Poland and Denmark has prompted banking, financial and insurance industry participants to demand advanced colocation services. Merely 13% of Swedes were said to be using cash for transaction in 2018.

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In August, the Swedish government announced audacious plans to become a cashless nation by 2023. Several European markets have observed over 50% of contactless in-store transactions, with biometric contactless cards gaining widespread adoption. The industry share from data center colocation in Europe is likely to reach US$25 billion in value by 2026.

Expanding IT & telecom infrastructure sector in Asia

Considering the attention IT & telecom infrastructure has been witnessing in recent years, expansion of digital data has led to the procurement of colocation services. Industry leaders are gearing to inject more funds in emerging economies, including India and China and advanced economies, such as Japan and Singapore.

Advanced telecommunications network in Japan is said to be rendering services to around 170 million mobile subscribers. Besides, Singapore witnessed investment of around USD 1 billion from Facebook in September 2018 to construct a data center. The APAC data center colocation market size is forecast to be around USD 50 billion by 2026.

Stakeholders to count North America data center market

Stakeholders have upped their investments in North America on the heels of facility modernization and construction of new projects to bring a paradigm shift in the IT infrastructure framework. For instance, Google LLC and Equinix, Inc., came up with Google Anthos solutions and Equinix Cloud Exchange Fabric in July 2020 to ease the process of application migration to the cloud. Meanwhile, Vapor IO, Inc. announced partnership with Cloudflare, Inc. in January 2020 to bolster its edge infrastructure to 36 cities in the U.S.

Companies such as Facebook, Google, Amazon and Microsoft Corporation have infused funds toward content streaming services and video conferencing. The uptake of content delivery applications and limitations of on-premise data centers have encouraged American companies to take a giant leap towards colocation data centers. In terms of value, the North America data center colocation market is expected to surpass USD 45 billion by 2026.

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China manufacturing industry to realize upsides of data colocation

Flourishing manufacturing industry has prompted stakeholders to realize benefits of the global data center colocation industry trends. In doing so, China is expected to be a promising market of electronics components. China was projected to have exported over USD 102 billion of electronic components and goods in 2019.

Manufacturing companies in APAC are adopting advanced manufacturing techniques to boost automation. For instance, Equinix Inc., acquired the operation of GPX Global Systems, Inc. to expand its footprint in India.

Increased market uptake from North America defense sector

A compelling demand for data center colocation facilities from government & defense sector in the U.S. and Canada has mustered up the confidence among stakeholders. Federal authorities are adopting advanced technologies, including AI, automation and cloud. The Department of Defense (DoD), for instance, asserted in February 2020 that it would adopt a detailed set to rules overseeing the use of and growth of AI across the U.S. military.

Sustained traction from end-users, including governments is likely to boost the acceptance of wholesale colocation services in North America. Wholesale colocation data centers provide advanced cooling and power infrastructure to keep up with the demand for high server densities.

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