Colocation Data Center Market to See 15.4% Annual Growth Through 2020

Scalable storage, lower IT costs and managing increased complexity are driving expansion

WELLESLEY, Mass., Jan. 24, 2018 (GLOBE NEWSWIRE) -- The growing global demand for data storage is being increasingly served by colocation data centers, according to a report by BCC Research. Colocation data centers meet need of financial services and other industry sectors for increased scale, lower IT costs and managing increased technology complexity.

These trends are driving a  global colocation market that is anticipated to expand at a compound annual growth rate (CAGR) of 15.4% between 2016 and 2020, when the market will be worth an estimated $54.8 billion, according to the report Colocation Data Center Industry: Global Markets to 2020.

Growth of the industry can also be tied to the expansion of companies providing cloud and colocation  services into new areas, particularly in China and Singapore, which are increasingly joining the movement toward increased storage in highly scalable, cost-efficient data centers.

Globally, leading colocation companies mentioned in this report include Equinix, Digital Realty, NTT Data, Century Link, Level 3, Verizon, Cyrus One, Dupont Fabros, Telehouse and Global Switch, among others.

Research Highlights

  • The four largest colocation providers lease data center capacity from Microsoft; their capacity totals 60MW.
  • In 2016, Amazon, Microsoft and Google spent $31.5 billion on data centers, an increase of 22% over 2015.
  • Colocation data centers help enterprises save costs related to IT infrastructure, disaster recovery and security compliance.
  • North and South America accounted for 54.3% of the colocation data center market in 2016, followed by Europe, the Middle East and Africa (28%) and the Asia-Pacific region (18%). In the Americas, the United States hosts a major share of the global data center market, while in the Asia-Pacific region, Japan is the largest market for data centers.

“The global colocation data centers market is relatively fragmented, with only a few global players having more than a 5% market share,” said Michael Sullivan, BCC Research Senior Editor. “The top five competitors in the market accounted for 21.1% of the total market in 2016. Equinix was the largest company with 8.5% of the market.”

Recommendations: Inorganic Market Entry and Expansion into Emerging Markets

The report makes recommendations for companies looking to profit in the global data center colocation market. Chief among those is inorganic expansion or entry into the market, which is seen as an effective way to increase global outreach and consumer bases. Another strategy for expanding outreach, the report said, is to enter or expand into emerging markets where growth potential is high due to rising digitization and government regulations. A focus on edge computing and partnership with cloud operators can guarantee stable revenues, while offering additional services such as interconnection and firewall management can help companies stand out. Finally, the high demand for retail colocation space is providing high margins for market players.

About BCC Research

BCC Research is a publisher of market research reports that provide organizations with intelligence to drive smart business decisions. By partnering with industry experts worldwide, BCC Research provides unbiased measurements and assessments of global markets covering major industrial and technology sectors, including emerging markets. For more information about BCC Research, please visit Follow BCC Research on Twitter at @BCCResearch.


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