[137 Pages Report] The data center colocation market includes the practice of providing data center space and infrastructure, including power, network bandwidth, physical security, and cooling component on lease to the end-users. Based on customer requirement, these facilities are categorized into two major types, which are retail colocation and wholesale colocation. The retail colocation offers the option to rent space, racks, and cages, whereas the wholesale colocation involves leasing of entire rooms and facilities to place IT equipment. The data center colocation reduces the overall IT cost of enterprises, which is expected to drive the growth of the data center colocation market.

The data center colocation market size is expected to grow from USD 31.5 billion in 2017 to USD 62.3 billion by 2022, at a Compound Annual Growth Rate (CAGR) of 14.6%. The growing requirement for scalable data centers, reduced overall IT expenditure, and the growing data center complexities are the major growth drivers of the market. In this study, 2016 has been considered as the base year and 2017�2022 as the forecast period. The main objective of this report is to define, describe, and forecast the global data center colocation market on the basis of types, end-users, industries, and regions.

The growing need for reducing the IT expenditure is one of the factors driving the growth of the data center colocation

The global data center colocation size is expected to grow from USD 31.52 billion in 2017 to USD 62.30 billion by 2022, at a Compound Annual Growth Rate (CAGR) of 14.60%. There is an increasing need for reducing the IT expenditure spent on commissioning mission-critical data center facilities. Data center colocation services provide the required scalability and cost-effectiveness for managing the daily data requirement. This acts as one of the major drivers of the data center colocation market. However, high initial costs may hold back the end-users from adopting these solutions.

Retail colocation is expected to account for the largest market share during the forecast period

The retail colocation type in the data center colocation market is expected to have the largest market share during the forecast period. Retail colocation provides power, space, cooling, cabling, and support services. It also provides flexibility in terms of IT infrastructure, and therefore proves advantageous for Small and Medium-Sized Enterprises (SMEs). This utility of retail colocation is expected to drive its market share in the global data center colocation.

Large enterprises are estimated to have the largest market share during the forecast period

The data center colocation end-users include SMEs and large enterprises, wherein large enterprises are expected to have the largest market share during the forecast period. Large enterprises are inclined toward adopting colocation services, as they are able to lease large spaces on lease and meet their power and computational requirements. Moreover, colocation services help large enterprises to have complete control over the data center infrastructure. These services also aid in business continuity due to their disaster recovery benefits. This is expected to fuel the data center colocation market during the forecast period.

North America is expected to have the largest market in 2017, whereas Asia Pacific (APAC) is projected to grow at the highest rate during the forecast period

North America is expected to capture the largest market share in 2017 and the trend is likely to continue until the near future. This region is growing due to the presence of a large number of data centers and it has witnessed a rapid adoption due to the availability of comprehensive solutions. On the other hand, the data center colocation market in APAC is expected to witness an exponential growth and projected to be one of the fastest-growing regions in the global market. This is mainly due to the increasing volumes of data center traffic in countries, such as India, Australia, and China.

Market Dynamics

Driver: Reduction in the overall IT cost

The process of hosting a data center infrastructure on-site requires skilled IT employees to run the operations. On-sight hosting also involves various expenditures for server management and infrastructure maintenance. Moreover, setting up a new data center facility requires a large amount of initial investment and increases the overall CAPEX of the enterprises. Thus, enterprises are increasingly becoming considerate of the CAPEX spent on commissioning mission-critical data center facilities and are looking for ways to reduce cost and improve Return on Investment (ROI). This pressure to cut down the IT cost is one of the major catalysts that encourage enterprises to explore new IT infrastructure options. Thus, enterprises are increasingly switching to data center colocation providers for power, space, bandwidth, and Value-Added Services (VAS), such as interconnection services, internet solutions, and skilled managed IT services based on their size and requirement. The increasing number of enterprises adopting data center colocation can also be seen by the survey conducted by Uptime Institute, LLC, wherein they found that 26% of enterprises in 2015 opted for data center colocation services, as opposed to 25% in 2015.

Restraint: High startup and maintenance cost

The cost required for initial set-up of IT equipment in the data center facilities is significantly high. Enterprises opting to lease colocation facilities have to purchase their own IT equipment. The enterprises also have to ship the equipment on the colocation centers. This price of shipping the equipment depends on the size and weight of the equipment. Moreover, the cost and complexity involved in the initial deployment of data infrastructure solutions is significantly higher. After deployment of these equipment in the colocation facilities, enterprises are also responsible for maintenance activities associated with the equipment. These maintenance activities are performed off-site at the data center location, which further increases the associated cost. The colocation facilities are equipped with remote support for maintenance activities and provide services such as remote hands and smart hands. However, these services are also associated with additional cost for the customers. This additional startup and maintenance cost is expected to act as a hindrance to the growth of the global data center colocation market.

Opportunity: Increasing disaster recovery and business continuity requirements

Disaster recovery is a major concern for data center users, across the globe. IT infrastructure facilities are prone to disasters such as earthquakes, security attacks, fire outages, and other unplanned events. In order for businesses to not suffer from drastic losses owing to such disasters, there must be proper disaster recovery measures in place. Data center colocation facilities are located away from the users premises and are less prone to disasters. These facilities can be controlled remotely, adding to their reliability in disaster recovery measures. Therefore, colocation facilities are anticipated to become an ideal backup and recovery option because they enable businesses to house key data in a remote location. Thus, due to the presence of resilient and safe colocation facility, business continuity can be achieved, which is why these facilities are expected to witness growing demand.

Challenge: Government regulations and security requirements

Data centers are continuously facing the need to comply with stringent government regulations from federal and state authorities. Government bodies are imposing various regulations that deal with energy efficiency, water usage, and impact of data centers on the environment. Moreover, Data Center Optimization Initiative (DCOI), established to fulfill the Federal Information Technology Acquisition Reform Act (FITARA), requires the agencies to develop and report their data center strategies and increases the need for stricter compliances as well. Data centers also need to comply with certain security requirements and operators need to be proactive on the security front. Data centers are required to provide the monitoring of environmental systems coupled with physical access to security systems, such as card or biometric access, motion sensors, and CCTV systems. Installation and operation of these systems require additional cost and expertise. These challenges with the compliance to additional regulatory and security requirements may restrict the market growth.

Scope of the Report

Report Metric Details Market size available for years 2015�2022 Base year considered 2016 Forecast period 2017�2022 Forecast units Billion (USD) Segments covered Type (Retail colocation and Wholesale colocation), End-user (SMEs and Large Enterprises), Industry and Region Geographies covered North America, Europe, APAC, MEA, and Latin America Companies covered NTT Communication Corporation (Japan), Digital Realty Trust, Inc. (US), Cyxtera Technologies, Inc. (US), CyrusOne Inc. (US), Equinix, Inc. (US), Global Switch (UK), AT&T, Inc. (US), CoreSite Realty Corporation (US), China Telecom Corporation Limited (China), Verizon Enterprise Solutions, Inc. (US)

The research report categorizes the market to forecast the revenues and analyze the trends in each of the following sub-segments:

Trends in each of the following subsegments:

Data Center Colocation Market By Type:

Retail colocation

Wholesale colocation

By End-User:

Small and Medium-Sized Enterprises (SMEs)

Large Enterprises

Data Center Colocation Market By Industry:

Banking, Financial Services, and Insurance (BFSI)

IT and telecom

Government and defense

Healthcare

Research and academics

Retail

Energy

Manufacturing

Others (media and entertainment, and transportation and logistics)

By Region:

North America US Canada

Europe UK Germany France Rest of Europe

APAC India Australia China Rest of APAC

MEA South Africa Rest of MEA

Latin America Brazil Mexico Rest of Latin America



Key Market Players

NTT Communication Corporation (Japan), Digital Realty Trust, Inc. (US), Cyxtera Technologies, Inc. (US), CyrusOne Inc. (US), Equinix, Inc. (US), Global Switch (UK)

NTT Communications Corporation was founded in 1999 and is headquartered in Tokyo, Japan. The company provides information and communication technology solutions globally. The solutions provided by the company include web communication, mobile communication, broadband communication, security solution outsourcing, IP transmission services, data center colocation and hosting, and teleconferencing services, among others. The company has over 140 colocation data centers around the globe. These data centers are equipped with uninterruptible backup power and offer fully redundant power supplies from multiple power feeds. These features aid in achieving high levels of colocation hosting uptime and network uptime for the company�s data center facilities.

Recent Developments

In June 2017, NTT expanded its data center network by launching 10Gbps large-volume network to connect NTT�s Enterprise Cloud for enterprises collocated at more than 30 data centers around the world.

In May 2017, NTT launched its Germany Munich 2 Data Center in Germany. The launch offers server space expanded to 5,600 square meters.

Critical questions the report answers:

Where will all these developments take the industry in the long term?

What are the upcoming trends for the Data center colocation market?

Which segment provides the most opportunity for growth?

Who are the leading vendors operating in this market?

What are the opportunities for new market entrants?

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