Data Center Equipment Market Challenges and Industrial Outlook 2017 to 2024

North America is anticipated to hold the largest market share. Presence of large number of industries adopting advanced technologies for efficient data management in North America, is a prime reason for North America dominating the data center colocation market. The market for Asia Pacific is anticipated to grow at a rapid rate during the forecast timespan owing to various government initiatives in emerging economies such as Made in China 2025 and Make in India that is promoting the growth of SMEs in the region.

These businesses are switching to sophisticated facilities to safeguard against data losses and to ensure business continuity at all times. Efforts by the government of Singapore for economic development is also a major factor driving the data center colocation market in Asia Pacific. The provision of fast broadband services and high awareness of the benefits of using colocation facilities is contributing to the strong growth in the Japanese market.

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Data Center Colocation Market size is expected to grow at a rapid rate in the forecast timespan owing to growing complexities, requirement of scalable, reliable and safe infrastructure, and reduced operational and installation costs. The increasing number of businesses in emerging economies is leading to a sharp rise in the need to adopt enhanced business operations for the management of data. This has led to a rise in the number of data centers in the recent years. The requirement to incorporate sophisticated ways for data management in businesses is boosting the data center colocation market growth.

Colocation facilities provide cooling, power, space, storage, server security, and the networking equipment for the connection of these elements to network service providers and telecommunication networks at low cost. Businesses with limited requirement of data centers can collocate space from the existing facilities. Building a new facility is a massive project that can drain the company’s vital resources such as time, labor, and financial funds. These factors are anticipated to boost the data center colocation market in the coming years.

Vendors operating in the data center colocation market offer enhanced maintenance and services to enterprises to maximize their productivity. This enables businesses to focus on their core business with the efficient management of their data. Furthermore, with the rising trend of big data, expansion of existing infrastructure takes up ample of space on the premises. Increasing focus of companies on reducing the operational expenditure and capital is projected to propel the industry growth. With the rising trend of the adoption of cloud, the need for exclusively owned infrastructure has reduced, which is expected to fuel the data center colocation market growth. The rising concerns about environment protection and the need to reduce carbon emissions have led to companies switching to green technologies as an energy efficient alternative. This trend is further expected to boost the demand.

Stringent government rules and regulations pertaining to the data center colocation is expected to hinder the market growth. Operators in the data center colocation market are expected to comply with strict rules. EPA and OSHA regulations keep a check on the standard of data centers. The connectivity issues coupled with fluctuating operating costs is expected to hamper the data center colocation market growth in the coming years. Physical and cyber security threats are a major factor hindering growth. Businesses and financial organizations store confidential and significant information. This makes security threats a major concern for the operators in the industry.

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Data center colocation market, by type, has been bifurcated into wholesale retail colocation. The retail segment is expected to witness high growth in the forecast period owing to the advantages offered for small and medium sized businesses. Enterprises that require high flexibility in hosting IT infrastructure favor retail colocation over wholesale colocation. Moreover, retail colocation provides cabling, cooling, space, power and support services, which is a major factor driving the data center colocation market growth. The wholesale colocation segment is also anticipated to grow in the coming years owing to the benefits offered such as high bandwidth and large IT space and are ideally suited to large enterprises

The data center colocation market segmented by end-users comprises of large enterprises and small and medium sized enterprises. The large enterprise segment is anticipated to witness high growth owing to the increased adoption colocation services for their data storage requirements. Colocation services enable large enterprises to gain complete control over their data center infrastructure, which makes them switch to colocation for enhancing their business operations. Moreover, rapid technological developments such as IoT and cloud services coupled with increase in the data storage requirements in large enterprises is boosting the data center colocation market.

The segmentation of the data center colocation market by vertical has been divided into healthcare, manufacturing, energy, retail, IT & telecom, government & defense, energy, media & entertainment, transportation & logistics, and banking, financial services & insurance (BFSI). The data center colocation market for healthcare sector is expected to grow at a fast rate owing to the increasing amount of data being generated. With technological developments in the medical sectors and modernization of medical systems, many healthcare organizations are shifting to digital ways to store their patient records and relevant data. Data center colocation is enabling them to reduce the costs and manage their data to improve patient response times. The data center colocation market of IT & telecom sector is also witnessing fast growth owing to the implementation of latest technologies in the domain, and initiatives undertaken by various governments to refurbish the existing IT & telecom infrastructure.

Key players in the data center colocation market include Equinix Inc., AT&T Inc., NTT Data Corporation, Centurylink Technology Solutions, Interxion Holding NV, Global Switch Corporation, Internap Corporation, Verizon Communication Ltd., Cyxtera Technologies Inc., China Unicom, and IBM Corporation. Increasing competition among companies to innovate solutions to enhance their market presence is a major factor propelling the data center colocation market growth in the forecast timespan. For instance, Mitsubishi Corporation and Digital Reality announced a joint project in Japan by launching a new data center in Tokyo.

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