Data Center Colocation Witnessing a Boom in the Coming Years

Data Center Colocation refers to a type of data center service facility which allows businesses to rent out space for their servers and computing hardware and provide cooling, power, bandwidth, physical security and more. It helps the companies stay competitive by reducing their operating costs and information, communication and technology(ICT) expenditure. Furthermore, it is also assisting SMEs to outsource their IT related work, resulting in a more efficient and streamlined workflow.

The growing internet of things (IoT) penetration around the world has resulted in the widespread adoption of data collection and processing. This rise in the data requirements has resulted in an increased burden on businesses to properly maintain an IT infrastructure. This is estimated to be one of the main driving forces behind the growth of the global Data Center Colocation Market. Furthermore, increasing expenditure on IoT around the world. This combined with the favorable government policies, and increasing IT investments by businesses is also estimated to fuel this growth in the years to come.

MARKET OVERVIEW

In addition to this, the demand for data center colocation is estimated to inflate in the coming years on account of increasing data traffic around the world. In addition to this, rising investments in the development of IT infrastructure, in both developing and developed countries are also anticipated to instigate this growth in the years to come.

Moreover, rising concerns regarding the energy consumption by data centers are also becoming an increasing concern for governments with every passing day. Data centers consume a very high amount of energy for their daily operation and cooling. In order to minimize this impact, the government is trying to bring in innovative solutions to the market and is also promoting the use of colocation centers instead of setting up of individual centers. This is also anticipated to have a further positive impact on the demand for data center colocations during the coming years.

On the basis of the size of the organizations, SMEs will take the major advantage of the budding data center colocation services as their smaller size and operational capabilities restrain them from not only splurging high amounts on IT infrastructure but also because of the fact that they only require limited IT functionality, in comparison to larger enterprises. In addition to this, the flexibility offered by colocation services, by allowing users to rent from a very small rack space to the whole data center, also increases their viability to these enterprises. Moreover, rapidly changing trends in the data management and employment schemes, such as the increasing adoption of bring your own device (BYOD) policies, and increasing adoption of cloud computing solutions, is also estimated to be favorable for the market. Larger enterprises generally own individual data centers due to privacy and data security concerns. However, in recent times, in order to abstain from excess operational budgets, combined with the growing data burden, multiple larger enterprises are also adopting colocation services, thus inflating the market growth further in the years to come.

Data centers are also being adopted in almost all industry verticals, however, the banking, financial services, and insurance (BFSI) sector are heavily adopting the use of these services. Moreover, increasing data traction in the media and entertainment, and communication and technology industry is also anticipated to further bulge demand for colocation services.

Additionally, there is a high splurge on data centers and the services provided by them all around the globe. The North American and European regions have been the early adopters of data center colocations services and are thus also home to some of the leading companies in this market. They are also actively working on the reduction of their carbon footprint, thus are further promoting the use of colocation services as an alternative to individual data centers.

The Asia Pacific region is home to some of the fastest-growing economies around the globe and is witnessing incredible amounts of investments in the development and setting up of their IT infrastructure. For example, in July 2019, the Adani group announced that they would invest INR70,000 crore to set up solar-powered data parks in Andhra Pradesh, India. Thus, this region is anticipated to witness some key growth prospects in terms of the development and adoption of data center colocation services in the years to come.

COMPETITIVE OVERVIEW

There is a high volume of companies working in the domain of data center colocation market, however, some have solidified their position as the leading providers in this field. These players are involved in a plethora of investments, product launches, and development to further strengthen their position, which is thus further projected to augment the data center colocation market in the years to come. Some of these are:

• In December 2019, InterXion entered into an agreement to acquire 70% of the controlling interest in Icolo, a Kenyan data center operator to expand its carrier and cloud-neural colocation data center services in partnership with Pembani Remgro Infrastructure Fund (PRIF), in the African region.
• In December 2019, Flexential, a leading provider of data center colocation and hybrid IT solutions, announced its expanded partnership with Onyx CenterSource, adding More Cloud and Disaster Recovery as a Service.
• In October 2019, AMP Capital acquired Expedient, a cloud computing, and data center services company, from Landmark Media Enterprises.
• Yotta Infrastructure is building the largest data center in India, the Yotta NM1, which is set to go live in January 2020 and will offer unlimited scalability of colocation space, the power to business enterprises, and more.
• In June 2018, Brookfield Infrastructure Partners bought AT&T’s global data center portfolio for US$1.1 billion, alongside the announcement by Brookfield of their new company, Evoque Data Center Solutions, which will provide colocation services out of the 31 facilities that they gained from this transaction.
• In April 2018, Macquarie Infrastructure Partners became an investor in the data center service providers Aligned Energy.

FUTURE PROSPECTIVES

The data center colocation market is headed towards a robust growth with the rising investments and rapidly budding data center projects, which are estimated to augment this growth further in the coming years. According to the analysis by Knowledge Sourcing Intelligence the data center colocation market is estimated to grow at a CAGR of 15.81% to reach US$85,605.260 million by 2024, from US$35,481.250 million by 2018.

Knowledge Sourcing Intelligence is a market research and consulting firm based out of India. Steered by some of the industry experts, the company provides syndicated reports, custom research, and consulting services.