Global Data Center Colocation Services Growth Opportunities

Global Data Center Colocation Services Growth Opportunities

Future Growth Potential with Hyperscale Data Centers and Emerging Economies

RELEASE DATE
26-Jul-2021
REGION
Global
Research Code: MG14-01-00-00-00
SKU: EG02165-GL-MT_25613
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Description

The global colocation services market continues to maintain its growth streak through the pandemic and is expected to continue on a high growth trajectory over the next 5 to 7 years. Key factors that will drive growth during this period are increasing demand from hyperscale data centers, high levels of investment pouring in, significant increase in data creation and consumption, high volumes of data traffic fuelled by emerging technologies, such as 5G, edge, IoT, along with AI/ML developments, ever-increasing enterprise outsourcing, increasing adoption of hybrid-cloud, and the high degree of data center activity in emerging economies.

Colocation services are driven significantly by the increasing need for hyperscale capacity from the enterprises primarily from public cloud services provider segments. The contribution to demand is expected to continue throughout the forecast period. Hyperscale data centers are expected to increase from 509 data centers in 2019 to 890 in 2025 at a CAGR of 9.76%. Most development is expected to happen in Asia and North America. Asia-Pacific is expected to have a majority share in hyper-scale data centers globally, with more than 40% of the market share by 2030. North America’s market share is expected to decline gradually during this period. Europe is expected to see its hyper-scale market share maintained between 19% to 20% as development in secondary markets and key locations of the Nordics and Eastern Europe drive growth in the continent.

As the enterprise outsourcing boom continues, companies are becoming more aware about the benefits of using third-party data center services; there is a better understanding and appreciation of the benefits of leveraging specialist service providers to facilitate their IT operations and mitigate risks. Enterprises are implementing multiple infrastructure options to ensure optimal deployment of each application. The shift from capital to operating expenses and decreased hardware maintenance burden will motivate enterprises to adopt third-party data center services.

Data creation has increased manifold due to increased penetration of internet-enabled devices and industrial sensors, such as IoT devices, leading to high demand for data transfer and data storage systems. This has led to massive investments in data centers across the globe. This increase in data center investment, mainly from technology firms will be a key driver for market growth. Cloud investments are mainly driven by North American technology firms that are investing heavily in hyperscale facilities across the globe. The data center industry is also witnessing a massive wave of investment activity from special purpose acquisition companies (SPACs) and marquee investors; this is expected to take M&A activities to the next level in the coming years.

The Asia-Pacific region is expected to become a hub for data center construction as companies in China, South Korea, Japan, and Taiwan try to take advantage of the coming boom in data creation due to 5G technology. The APAC colocation services market is the largest in the world with a revenue contribution of 41% in 2020. APAC is expected to become a hub for data center construction as companies in China, South Korea, Japan, and Taiwan invest to take advantage of the coming boom in data creation due to 5G technology.

India is a key market to watch out for in APAC. It offers tremendous growth potential over the forecast period with an estimated CAGR of 22%. It is one of the fastest growing data center market in the world and is expected to emerge as the next hub of APAC during the forecast period. North America is the second largest market in the world for colocation services; even though NA is expected to maintain its second position throughout the forecast period, its overall global revenue share is expected to gradually decline over the forecast period.

Author: Gautham Gnanajothi

RESEARCH: INFOGRAPHIC

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Table of Contents

Why is it Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top Three Strategic Imperatives on Data Center Colocation Services

Growth Opportunities Fuel the Growth Pipeline Engine™

Data Center Colocation Services Scope of Analysis

Data Center Colocation Services Segmentation

Key Competitors for Data Center Colocation Services

Key Growth Metrics for Data Center Colocation Services

Data Center Colocation Services Market—Market Trends

Hybrid Colocation—Cloud-on-ramps Fuel Hybrid Cloud Adoption

Hybrid Colocation—Cloud-on-ramps Fuel Hybrid Cloud Adoption (continued)

Sustainability Takes Center Stage

Energy Storage—The Lithium-ion Era

Energy Storage—The Lithium-ion Era (continued)

Growth of Hyperscale—The Juggernaut Pushes On

Robotics—The Next Phase of Data Center Automation

Market Consolidation—M&As and JVs at an All-time High

Edge Computing—Rise of Distributed Intelligence

Artificial Intelligence—Optimizing Data Center Performance

Growth Drivers for Data Center Colocation Services

Growth Restraints for Data Center Colocation Services

Forecast Assumptions—Data Center Colocation Services

Revenue Forecast—Data Center Colocation Services

Revenue Forecast Analysis—Data Center Colocation Services

Revenue Forecast by Region—Data Center Colocation Services

Revenue Forecast Analysis by Region—Data Center Colocation Services

Revenue Forecast by Industry Vertical—Data Center Colocation Services

Revenue Forecast Analysis by Industry Vertical—Data Center Colocation Services

Revenue Forecast by Service Type—Data Center Colocation Services

Revenue Forecast Analysis by Service Type—Data Center Colocation Services

Competitive Environment—Data Center Colocation Services

Revenue Share—Data Center Colocation Services

Revenue Share Analysis—Data Center Colocation Services

Key Growth Metrics for Data Center Colocation Services—North America

Revenue Forecast—Data Center Colocation Services: North America

Yearly Installed Capacity Forecast—Data Center Colocation Services: North America

Revenue Forecast Analysis—Data Center Colocation Services: North America

Revenue Forecast by Country—Data Center Colocation Services: North America

Revenue Forecast Analysis by Country—Data Center Colocation Services: North America

Revenue Forecast by Industry Vertical—Data Center Colocation Services: North America

Revenue Forecast by Service Type—Data Center Colocation Services: North America

Revenue Forecast Analysis by Industry Vertical and Service Type—Data Center Colocation Services: North America

Key Growth Metrics for Data Center Colocation Services—Europe

Revenue Forecast—Data Center Colocation Services: Europe

Yearly Installed Capacity Forecast—Data Center Colocation Services: Europe

Revenue Forecast Analysis—Data Center Colocation Services: Europe

Revenue Forecast by Country—Data Center Colocation Services: Europe

Revenue Forecast Analysis by Country—Data Center Colocation Services: Europe

Revenue Forecast by Industry Vertical—Data Center Colocation Services: Europe

Revenue Forecast by Service Type—Data Center Colocation Services: Europe

Revenue Forecast Analysis by Industry Vertical and Service Type—Data Center Colocation Services: Europe

Key Growth Metrics for Data Center Colocation Services—APAC

Revenue Forecast—Data Center Colocation Services: APAC

Yearly Installed Capacity Forecast—Data Center Colocation Services: APAC

Revenue Forecast Analysis—Data Center Colocation Services: APAC

Revenue Forecast by Country—Data Center Colocation Services: APAC

Revenue Forecast Analysis by Country—Data Center Colocation Services: APAC

Revenue Forecast Analysis by Country—Data Center Colocation Services: APAC (continued)

Revenue Forecast by Industry Vertical—Data Center Colocation Services: APAC

Revenue Forecast by Service Type—Data Center Colocation Services: APAC

Revenue Forecast Analysis by Industry Vertical and Service Type—Data Center Colocation Services: APAC

Key Growth Metrics for Data Center Colocation Services—ROW

Revenue Forecast—Data Center Colocation Services: ROW

Yearly Installed Capacity Forecast—Data Center Colocation Services: ROW

Revenue Forecast Analysis—Data Center Colocation Services: ROW

Revenue Forecast by Country—Data Center Colocation Services: ROW

Revenue Forecast Analysis by Country—Data Center Colocation Services: ROW

Revenue Forecast by Industry Vertical—Data Center Colocation Services: ROW

Revenue Forecast by Service Type—Data Center Colocation Services: ROW

Revenue Forecast Analysis by Industry Vertical and Service Type—Data Center Colocation Services: ROW

Growth Opportunity 1: New Product Development for Market Expansion

Growth Opportunity 1: New Product Development for Market Expansion (continued)

Growth Opportunity 2: Geographic Expansion for Revenue Acceleration

Growth Opportunity 2: Geographic Expansion for Revenue Acceleration (continued)

Growth Opportunity 3: Edge and Modular Data Centers for Latency Needs

Growth Opportunity 3: Edge and Modular Data Centers for Latency Needs (continued)

Growth Opportunity 4: Capitalize on Cloud Growth for Revenue Diversification

Growth Opportunity 4: Capitalize on Cloud Growth for Revenue Diversification (continued)

Growth Opportunity 5: Enhanced Value Proposition for Competitive Differentiation

Growth Opportunity 5: Enhanced Value Proposition for Competitive Differentiation (continued)

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List of Exhibits (continued)

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Related Research
The global colocation services market continues to maintain its growth streak through the pandemic and is expected to continue on a high growth trajectory over the next 5 to 7 years. Key factors that will drive growth during this period are increasing demand from hyperscale data centers, high levels of investment pouring in, significant increase in data creation and consumption, high volumes of data traffic fuelled by emerging technologies, such as 5G, edge, IoT, along with AI/ML developments, ever-increasing enterprise outsourcing, increasing adoption of hybrid-cloud, and the high degree of data center activity in emerging economies. Colocation services are driven significantly by the increasing need for hyperscale capacity from the enterprises primarily from public cloud services provider segments. The contribution to demand is expected to continue throughout the forecast period. Hyperscale data centers are expected to increase from 509 data centers in 2019 to 890 in 2025 at a CAGR of 9.76%. Most development is expected to happen in Asia and North America. Asia-Pacific is expected to have a majority share in hyper-scale data centers globally, with more than 40% of the market share by 2030. North Americas market share is expected to decline gradually during this period. Europe is expected to see its hyper-scale market share maintained between 19% to 20% as development in secondary markets and key locations of the Nordics and Eastern Europe drive growth in the continent. As the enterprise outsourcing boom continues, companies are becoming more aware about the benefits of using third-party data center services; there is a better understanding and appreciation of the benefits of leveraging specialist service providers to facilitate their IT operations and mitigate risks. Enterprises are implementing multiple infrastructure options to ensure optimal deployment of each application. The shift from capital to operating expenses and decreased hardware maintenance burden will motivate enterprises to adopt third-party data center services. Data creation has increased manifold due to increased penetration of internet-enabled devices and industrial sensors, such as IoT devices, leading to high demand for data transfer and data storage systems. This has led to massive investments in data centers across the globe. This increase in data center investment, mainly from technology firms will be a key driver for market growth. Cloud investments are mainly driven by North American technology firms that are investing heavily in hyperscale facilities across the globe. The data center industry is also witnessing a massive wave of investment activity from special purpose acquisition companies (SPACs) and marquee investors; this is expected to take M&A activities to the next level in the coming years. The Asia-Pacific region is expected to become a hub for data center construction as companies in China, South Korea, Japan, and Taiwan try to take advantage of the coming boom in data creation due to 5G technology. The APAC colocation services market is the largest in the world with a revenue contribution of 41% in 2020. APAC is expected to become a hub for data center construction as companies in China, South Korea, Japan, and Taiwan invest to take advantage of the coming boom in data creation due to 5G technology. India is a key market to watch out for in APAC. It offers tremendous growth potential over the forecast period with an estimated CAGR of 22%. It is one of the fastest growing data center market in the world and is expected to emerge as the next hub of APAC during the forecast period. North America is the second largest market in the world for colocation services; even though NA is expected to maintain its second position throughout the forecast period, its overall global revenue share is expected to gradually decline over the forecast period. Author: Gautham Gnanajothi
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Author Gautham Gnanajothi
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WIP Number MG14-01-00-00-00
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GPS Codes 9AFF-A4,9B00-A4,9851