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2021
Data Center Colocation Market

Data Center Colocation Market

by Type (Retail Colocation, Wholesale Colocation), Organization Size (Small & Medium Scale Enterprise, Large Scale Enterprise), Industry Vertical (BFSI , IT & Telecommunication, Manufacturing, Energy and Utilities, Healthcare, Retail & E-commerce, Media & Entertainment, Government & Defense, and Others): Global Opportunity Analysis and Industry Forecast, 2021-2030
Update Available On-Demand

Report Code: A00247
Pages: 246
Jun 2021 | 30521 Views
Author(s) : Rachita R
Tables: 117
Charts: 62
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COVID-19

Pandemic disrupted the entire world and affected many industries.

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Data Center Colocation Market Statistics—2030

The global data center colocation market size was valued at $46.08 billion in 2020, and is projected to reach at $ 202.71 billion by 2030, growing at a CAGR of 15.7% from 2021 to 2030.

Numerous factors such as shut down of educational institutions, offices, & manufacturing facilities for an indefinite period; major sports and events postponed; major shift toward work-from-home culture; and implementation of social distancing policies, have led to increasing need of technologies, which can help them to pass through these difficult times. COVID-19 has positively impacted data center service providers due to high usage of data center colocation for accessibility of data and security of data during the work-from-home model which has resulted into significant increase in revenue in the data center colocation market across the globe.

The data center colocation market shows bullish trend with the rapid adoption of data center across all industry verticals. With the availability of solutions such as retail colocation and wholesale colocation, the market offers flexibility in terms of fulfilling the capacity requirement of individual organization. Data center colocation is process of renting of large physical space , internet bandwidth and network by service provider within an existing data center to deploy its own data center to store huge data and manage server operation of large companies. It allows sharing of the existing infrastructure of data center resources for data center colocation.

Data-Center-Colocation-Market-2021-2030

Depending on type, retail colocation dominated the data center colocation market share in 2020, and is expected to continue this trend during the forecast period. The growth of the segment is attributed to numerous benefits provided by this type such as managed service which results in lower costs of maintenance of data center, high security of data and others. However, the wholesale colocation segment is expected to witness highest growth in the upcoming years, as the wholesale colocation allows organizations to deploy thousands of server at one location and provide high-density computing, which notably provides data center colocation market opportunity. 

On the basis of enterprise size, large scale organization dominated the data center colocation market share and is expected to continue this growth during the forecast period. This growth is attributed to heavy investment of large scale organization in the data centers. Also, the growing requirement of heavy data storage in large scale organizations drives the data center colocation market globally. However the small and medium scale organization recorded highest growing segment due to major shift of small and medium scale business toward digitization and adoption of internet of things in the regular operation which creates the high amount of data, which drives the market globally.

On the basis of region, North America is dominating data center colocation market in year 2020 and it will continue this trends during forecast period. This growth is attributed due to heavy presence of large scale IT companies such as Amazon.com, Google LLC and Facebook in the region which need huge space to store data and increases requirement of colocation data center. However, the Asia-Pacific is expected to exhibit highest growth in 2020 and continue this trend during the data center colocation market forecast period, owing to strong economic growth along with the ongoing development in the IT and telecom sector, which drives organizations to invest heavily in data center colocation to sustain growth and improve productivity. In addition, factors such as major shift toward digital transformation, rise in cloud deployment and technological advancement among small & medium businesses, and ongoing modernization of data center and use of big data analytics in the organization drives heavy investment in data center colocation in emerging economies. Furthermore, enterprises in Asia-Pacific are focusing on enhancing their operations and increasing their overall efficiency to stay competitive in the market, which is expected to provide lucrative opportunities for the growth of the market during the forecast period. 

The report focuses on the growth prospects, restraints, and data center colocation market analysis. The study provides Porter’s five forces analysis of data center colocation industry to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the data center colocation market trends.

Data Center Colocation Market
By Type

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Wholesale Colocation segment is projected as one of the most lucrative segments.

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Segment review

The data center colocation industry is segmented on the basis of type, enterprise size, industry vertical, and region. By type, it is bifurcated into retail colocation and wholesale colocation. By enterprise size, the market is bifurcated into small and medium scale enterprise and large scale enterprise. By industry vertical, it is classified into BFSI, IT & Telecommunication, Manufacturing, Energy and Utilities, Healthcare, Retail & E-commerce, Media & Entertainment, Government & Defense, and Others. By region, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Impact of COVID-19 on the data center colocation market

The COVID-19 outbreak has a positive impact on the data center colocation market growth as data center colocation technologies are helping enterprises to address the extensive capacity demand of internet traffic. Most of the internet and data service providers are observing around 30–45% growth over a year in the global internet traffic. There is growing need to ensure the data center colocation service providers are having enough ability and capacity to deliver data center colocation service with high performance during the increased traffic demand. Therefore, service providers, are making considerable investments in data center colocation in a number of use cases. Moreover, the COVID-19 pandemic is opportunistic for the data center colocation market, due to growth of over the top (OTT) market as data center colocation services helps to organizations across the globe to enable their business objective during work from home initiatives by providing high data security to their valuable data. However some setbacks have seen in maintenance of data center colocation process during global lockdown due to shut down of manufacturing facility of equipment related to data center and its maintenance. 

Data Center Colocation Market
By Organization Size

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Small and Mediun Scale enterprise segment is projected as one of the most lucrative segments.

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Top impacting factors    

Numerous factors such as cost affordable IT operations of server colocation, increasing requirement of security, reliability and scalability of infrastructure and growing data centers complexities drives market globally. However, high initial & setup cost and network bandwidth issue is the major restraint for the market globally. Furthermore, increasing security concern for the business and increasing adoption of the hybrid cloud and virtualisation creates opportunities for the market globally during forecast period

Cost affordable IT operation of colocation data center

Shrinking IT budgets compel the companies to consider leasing services for their data center requirements as compared to installing in house data center facilities. Setting up an in-house data center cost proves to be a costly affair for companies, especially, during the initial phase of installation. In addition to the installation, an in-house data center requires regular operating expenditure and a high degree of care for data security and integrity. The installation and maintenance of an in-house data center represents a huge liability of financial and physical security for companies. This challenge is effectively addressed by colocation service providers who supply rack space, power, cooling, networking, bandwidth availability, firewalls and other such facilities in exchange for monthly rent, which thereby eliminates the capital cost for companies.

Data Center Colocation Market
By Region

2030
North America 
Europe
Asia-pacific
Lamea

Asia-Pacific is projected as one of the most significant region.

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Key Benefits For Stakeholders

  • The study provides an in-depth analysis of the data center colocation market along with the current trends and future estimations to elucidate the imminent investment pockets.
  • Information about key drivers, restraints, and opportunities and their impact analysis on the data center colocation market size is provided.
  • Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the data center colocation market.
  • The quantitative analysis of the data center colocation market from 2020 to 2028 is provided to determine the data center colocation market potential.

Data Center Colocation Market Report Highlights

Aspects Details
By Type
  • Retail Colocation
  • Wholesale Colocation
BY ENTERPRISE SIZE
  • Small-Medium Enterprises
  • Large Enterprises
By Industry Vertical
  • BFSI
  • HEALTHCARE
  • ENERGY & UTILITY
  • IT & TELECOM
  • RETAIL & E-COMMERCE
  • MANUFACTURING
  • GOVERNMENT & PUBLIC SECTOR
  • MEDIA & ENTERTAINMENT
  • OTHERS
BY REGION
  • North America  (U.S, Canada)
  • Europe  (UK, Germany, France, Russia, Rest of Europe)
  • Asia Pacific  (Japan, China, Australia, India, Rest of Asia-Pacific)
  • LAMEA  (Latin America, .Middle East, Africa)
Key Market Players CHINA TELECOM CORPORATION LIMITED, CORESITE REALTY CORPORATION, CYRUSONE, INC., CYXTERA TECHNOLOGIES, INC., DIGITAL REALTY TRUST, INC., EQUINIX, INC., GLOBAL SWITCH, KDDI CORPORATION, NTT COMMUNICATIONS CORPORATION-, VERIZON ENTERPRISE SOLUTIONS, INC.
 

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The adoption of data center colocation has increased over the period to provide reliable and consistent experiences for their subscribers. In addition, the ability of data center colocation to provide various opportunities for businesses to gain new insights to run the business efficiently is increasing its popularity among end users. Furthermore, many healthcare, retail & e-commerce, BFSI, IT & telecom, and tourism industries are investing in data center colocation to increase security and reduce the datacenter expences among the organizations, which in turn fuels the growth of the market.

Furthermore, the market is expected to witness significant growth in the future, due to increase in use of low latency networks such as long-term evolution, LTE micro stations, and 5G networks in domestic user and rise in adoption of artificial intelligence-oriented business models among organizations. For instance, organizations such as Amazon.com , IBM Corporation, and Google LLC massively use data center colocation to enhance customer experience. The adoption of data center colocation helps them to implement better communication network to bring positive transformation, which results in high-quality customer service, cost saving, global reach, and diverse server load. Moreover, rise in investments in artificial intelligence & tools among every industry vertical boosts the revenue growth.

Global colocation market has been witnessing a steady growth worldwide due to the ever increasing volumes of data generated by different industry verticals. Increased usage of internet-based services along with cloud computing services among organizations have significantly fuelled the demand for colocation data centers across the world. With such extensive data, enterprises have shown interest in outsourcing the data center services to third-party colocation service providers to save cost and effectively manage the data center tasks. Enterprises of all sizes have keenly resorted to colocation data centers services to manage the data center services efficiently at minimal costs.

The presence of a large number of providers in the global data center colocation market increases the competitive rivalry among key players. Therefore, data center colocation providers are differentiating themselves from competitors and driving revenue growth by incorporating new digital business technologies such as artificial intelligence, machine learning, 5G networks their offerings to gain a competitive edge, and retain their market position. The market is considerably concentrated with major players consuming significant market share. The degree of concentration will remain the same during the forecast period. The vendors operating in the market are taking several initiatives such as new product launches and partnership to stay competitive in the market and to strengthen their foothold in the market. In addition, companies are heavily investing in R&D activities to develop advanced data center colocation service, which is opportunistic for the market. For instance, in April 2020, KDDI America launch its new data center colocation product which offers single-source colocation, cloud migration, connectivity services for enterprises.

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