Global Data Centre Investment Trends and Growth Opportunities

Global Data Centre Investment Trends and Growth Opportunities

Increasing investments by hyperscale data centres will continue to drive market growth

Expected RELEASE DATE
07-Jul-2022
REGION
Global
Research Code: MG77-01-00-00-00
SKU: EG02238-GL-MT_26610

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Description

Global data centre investment continues to maintain its growth streak through the pandemic and is expected to continue on a high growth trajectory over the coming years. Key factors that will drive the market during this period are, increasing demand from hyper-scale data centres, 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 of course, high degree of data centre activity in emerging economies. Heavy investment from top hyperscale cloud providers is expected to continue at a healthy pace over the forecast period. Most development is anticipated in Asia and North America, and by 2030, Asia is expected to have a majority share in hyperscale data centres globally, with more than 40% of the market share. Enterprises increasingly outsource their data operations to third-party colocation services providers specializing in data center operations. The capability of colocation service providers to build scale in terms of physical space, adequate power supply, and cooling systems for servers and network connectivity backed by effective operations to ensure high SLAs boost enterprise confidence in outsourcing services. Demand for data center colocation services is forecast to be fueled by the growing need for hyperscale capacity from public cloud providers, OTT content, and media segments. COVID-19 is accelerating the digital adoption journey of enterprises further, creating higher demand for storage and compute capabilities. While data center providers invest heavily to build new capacity to address demand, deployment of emerging technologies like artificial intelligence and machine learning also encourages service providers to invest in new data center designs to boost efficiencies. Competition in the industry is intensifying to address global demand from carrier-neutral and telecom service providers. 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 centres 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 hyper-scale facilities across the globe. The data centre 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. Private Equity (PE) & Sovereign Wealth Investors (SWI) are playing an essential role in enabling data center service providers build the new hyperscale facilities as well as the acquisition of existing Data Centres. Increasingly the PE firms are willing to invest in large-scale facilities (facility of 50 MW to 100 MW or more) as well as for builds in relatively new markets. North America was the largest market in the world for data centre investment in 2021, however APAC will replace NA as the largest market for data centre investment by end of 2026. 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 22.0%.

Description

Investments in data centers are increasing, even during the COVID-19 pandemic. This Frost & Sullivan study provides an overview of the global data center industry, analyzing technological and investment trends shaping the industry's growth. The key factors driving growth include the rising popularity of hybrid colocation and hyperscale data centers, the emphasis on sustainability, the role of emerging technologies, and the data boom created by the proliferation of internet-enabled devices. The study’s analysis is segmented by type (colocation, hyperscale cloud, and enterprise) and region (Asia-Pacific, the Americas, and Europe, the Middle East, and Africa).

The study expects investments from leading hyperscale cloud providers to continue at a healthy pace over the forecast period from 2022 to 2031 (with 2021 as the base year). The growing need for hyperscale capacity from public cloud providers and over-the-top media content is forecast to fuel the colocation demand. The pandemic has accelerated the digital transformation of enterprises, creating higher demand for storage and compute capabilities. While data center providers invest heavily in building new capacity to meet demand, deploying emerging technologies like artificial intelligence and machine learning encourages providers to invest in new data center designs for enhanced efficiencies. Industry competition to address global requirements from carrier-neutral and telecommunication service providers has also intensified.

The advent of internet-enabled devices and industrial sensors expands data creation and, subsequently, the requirements for data transfer and storage, resulting in global investments in data centers to process and store information. There is also a wave of investments from special purpose acquisition companies and marquee investors in the industry. Private equity and sovereign wealth investors are essential to enabling data center providers to build new hyperscale facilities and acquire existing data centers. Private equity firms are keen to invest in large-scale facilities (a capacity of at least 50 megawatts) and builds in relatively new markets.

The study anticipates North America and Asia-Pacific as the most active hubs for data center growth. In 2021, North America was the largest market for data center investments. With robust data center construction and data creation activities, Asia-Pacific is expected to overtake North America by the end of 2026 and register more than 40% of the total market share. India, in particular, has strong potential to contribute to the data center industry growth.

Author: Gautham Gnanajothi

Table of Contents

Why is it Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top 3 Strategic Imperatives on the Data Center Industry

Growth Opportunities Fuel the Growth Pipeline Engine™

Trend Overview

Hybrid Colocation—Cloud On-Ramps Fuel Hybrid Cloud Adoption

Hybrid Colocation—Cloud On-Ramps Fuel Hybrid Cloud Adoption (continued)

Hybrid Colocation—Cloud On-Ramps Fuel Hybrid Cloud Adoption (continued)

Sustainability—The Center of It All

Sustainability—The Center of It All

Energy Storage—The Li-ion Era

Energy Storage—The Li-ion Era (continued)

Hyperscale Growth—The Juggernaut Pushes On

Robotics—Next Phase of Data Center Automation

Robotics—Next Phase of Data Center Automation

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

Edge Computing—Rise of Distributed Intelligence

Artificial Intelligence—Optimizing Data Center Performance

Scope of Analysis

Segmentation

Growth Drivers

Growth Restraints

Forecast Assumptions

Investment Forecast

Investment Forecast Analysis

Investment Forecast by Segment

Investment Forecast by Region

Investment Forecast Analysis by Segment and Region

Investment Forecast

Investment Forecast by Data Center Size

Investment Forecast by Region

Investment Forecast Analysis

Investment Forecast Analysis by Region—Americas

Investment Forecast Analysis by Region—EMEA

Investment Forecast Analysis by Region—EMEA

Investment Forecast Analysis by Region—APAC

Investment Forecast Analysis by Region—APAC

Investment Forecast

Investment Forecast by Region

Investment Forecast Analysis

Investment Forecast

Investment Forecast by Type

Investment Forecast Analysis

Growth Opportunity 1: Expanding Demand for Colocation

Growth Opportunity 1: Expanding Demand for Colocation (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)

Your Next Steps

Why Frost, Why Now?

List of Exhibits

List of Exhibits (continued)

Legal Disclaimer

Global data centre investment continues to maintain its growth streak through the pandemic and is expected to continue on a high growth trajectory over the coming years. Key factors that will drive the market during this period are, increasing demand from hyper-scale data centres, 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 of course, high degree of data centre activity in emerging economies. Heavy investment from top hyperscale cloud providers is expected to continue at a healthy pace over the forecast period. Most development is anticipated in Asia and North America, and by 2030, Asia is expected to have a majority share in hyperscale data centres globally, with more than 40% of the market share. Enterprises increasingly outsource their data operations to third-party colocation services providers specializing in data center operations. The capability of colocation service providers to build scale in terms of physical space, adequate power supply, and cooling systems for servers and network connectivity backed by effective operations to ensure high SLAs boost enterprise confidence in outsourcing services. Demand for data center colocation services is forecast to be fueled by the growing need for hyperscale capacity from public cloud providers, OTT content, and media segments. COVID-19 is accelerating the digital adoption journey of enterprises further, creating higher demand for storage and compute capabilities. While data center providers invest heavily to build new capacity to address demand, deployment of emerging technologies like artificial intelligence and machine learning also encourages service providers to invest in new data center designs to boost efficiencies. Competition in the industry is intensifying to address global demand from carrier-neutral and telecom service providers. 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 centres 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 hyper-scale facilities across the globe. The data centre 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. Private Equity (PE) & Sovereign Wealth Investors (SWI) are playing an essential role in enabling data center service providers build the new hyperscale facilities as well as the acquisition of existing Data Centres. Increasingly the PE firms are willing to invest in large-scale facilities (facility of 50 MW to 100 MW or more) as well as for builds in relatively new markets. North America was the largest market in the world for data centre investment in 2021, however APAC will replace NA as the largest market for data centre investment by end of 2026. 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 22.0%.
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Industries Energy
No Index No
Is Prebook Yes
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WIP Number MG77-01-00-00-00