Data Center Colocation Market Growth Report 2021 to 2031
The data center colocation market size is projected to reach US$ 162.31 billion by 2031 from US$ 52.32 billion in 2023. The market is expected to register a CAGR of 15.3% during 2023–2031. Rising enterprise demands for cost-effective solutions to reduce overall IT costs, rising adoption of high-performance computing, and growing disaster recovery and business continuity needs are likely to be key trends and drivers of the data center colocation market.
Data Center Colocation Market Analysis
The data center colocation market is experiencing significant growth globally. This growth is attributed to factors such as Rising enterprise demands for cost-effective solutions to reduce overall IT costs, rising adoption of high-performance computing, and growing disaster recovery and business continuity requirements. Moreover, developments in edge computing and the growing demand for AI on infrastructure are anticipated to hold several opportunities for the data center colocation market in the coming years.
Data Center Colocation Market Overview
With a colocation data center, businesses can rent data center infrastructure from a third party. While this transfers responsibility for most, if not all, of the infrastructure, businesses still need to secure data center assets such as cyber assets that do not fall to the colo’s responsibility for securing access to the physical infrastructure. The use of data center colocation facilities enables to reduction of the costs of power consumption, IT services, and cooling. It also provides power and high internet connectivity, which assists in maximizing uptime. Moreover, colocation facility providers provide data security for situations such as power outages and others.
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Data Center Colocation Market: Strategic Insights
Market Size Value in US$ 50,579.1 million in 2021 Market Size Value by US$ 136,647.9 million by 2028 Growth rate CAGR of 15.3% from 2021-2028 Forecast Period 2021-2028 Base Year 2021
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Data Center Colocation Market: Strategic Insights
| Market Size Value in | US$ 50,579.1 million in 2021 |
| Market Size Value by | US$ 136,647.9 million by 2028 |
| Growth rate | CAGR of 15.3% from 2021-2028 |
| Forecast Period | 2021-2028 |
| Base Year | 2021 |
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Data Center Colocation Market Drivers and Opportunities
Growing Need to Reduce Overall IT Costs to Favor Market
The growing need to reduce overall IT costs is indeed driving the data center colocation market. SMEs and large enterprises save a lot of cost by renting a data center to store critical information rather than building their own. To set up a data center, a company requires a large investment in architecture, server management, upfront capital expenditure, energy cost, operations, IT staffing, hardware, and more. On-site management of data center infrastructure requires highly skilled IT employees. It also incurs infrastructure maintenance and server management expenditures. Moreover, constructing a new data center facility needs high initial investments that increase the overall cost of enterprises. Thus, enterprises are becoming more considerate of the amount spent on constructing mission-critical data centers and seeking several methods to improve return on investment (ROI) and reduce cost.
Growing Advent of 5G.
The deployment of 5G is anticipated to significantly raise the volume of data traffic, as 5G offers higher data speed and lower latency than the 4G and other networks. According to the Cisco reports, 5G will support more than 10% of global mobile connections by 2023, with an average speed of 575 Mbps, which is 13 times faster than the average mobile connection today. Due to deployment in data traffic, businesses and enterprises will seek a location to process, store, and distribute their data more efficiently, contributing to the need for data center colocation providers. Moreover, the high advantage of 5G deployment is its ability to support a wide range of IoT applications and services, such as autonomous vehicles and industrial automation. Thus, 5G deployment will create lucrative opportunities for the Australian data center colocation market in the coming years.
Data Center Colocation Market Report Segmentation Analysis
Key segments that contributed to the derivation of the Data Center Colocation market analysis are type, enterprise size, and industry.
- Based on type, the data center colocation market is divided into retail and wholesale. The retail segment is anticipated to hold a significant market share in the forecast period.
- Based on enterprise size, the data center colocation market is divided into SMEs and large enterprises. The radiation hardening by design (RHBD) segment is anticipated to hold a significant market share in the forecast period.
- By industry, the market is segmented into IT & telecom, BFSI, healthcare, retail, and others. The IT & telecom is anticipated to hold a significant market share in the forecast period.
Data Center Colocation Market Share Analysis by Geography
The geographic scope of the data center colocation market report is mainly divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America.
North America has dominated the data center colocation market. High technology adoption trends in various industries in the North American region have fuelled the growth of the data center colocation market. Factors such as increased adoption of digital tools and high technological spending by government agencies, rising IT infrastructure, and the advent of 5G are expected to drive the North American data center colocation market growth. Moreover, a strong emphasis on research and development in the developed economies of the US and Canada is forcing the North American players to bring technologically advanced solutions into the market. In addition, the US has a large number of data center colocation market players who have been increasingly focusing on developing innovative solutions. All these factors contribute to the region's growth of the data center colocation market.
Data Center Colocation Market Report Scope
Data Center Colocation Market News and Recent Developments
The data center colocation market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. A few of the developments in the data center colocation market are listed below:
- Intelligent power management company Eaton announced the North American launch of an innovative new modular data center solution for organizations seeking to rapidly meet the growing requirements for edge computing, machine learning, and AI. Eaton’s SmartRack modular data centers can be deployed in a matter of days in facilities such as enterprise or colocation data centers, manufacturing facilities, and warehouses. (Source: Eaton Company Website, March 2024)
- ICG, the global alternative asset manager, and Teras Capital, the investment platform led by successful digital infrastructure entrepreneurs, announced the launching of Temples. Templus is the first state-of-the-art and sustainable regional data center platform in Southern Europe, with a new business model premised on proximity to end customers, safety, and the highest standards of energy efficiency. Ultimately, its goal is to become the leading regional colocation platform in Southern Europe, with a network of more than 20 data centers. (Source: ICG Company Website, May 2024)
Data Center Colocation Market Report Coverage and Deliverables
The “Data Center Colocation Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering below areas:
- Data center colocation market size and forecast at global, regional, and country levels for all the key market segments covered under the scope
- Data center colocation market trends as well as market dynamics such as drivers, restraints, and key opportunities
- Detailed PEST/Porter’s Five Forces and SWOT analysis
- DATA CENTER COLOCATION market analysis covering key market trends, global and regional framework, major players, regulations, and recent market developments
- Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments for the data center colocation market
- Detailed company profiles
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Type, Enterprise size and Industry
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, United Arab Emirates, United Kingdom, United States
Frequently Asked Questions
The global data center colocation market is expected to reach US$ 162.93 billion by 2031.
The key players holding majority shares in the global data center colocation market are Equinix Inc., IBM Corporation, AT&T Inc., Cyxtera Technologies, Inc., Digital Realty Trust LP, CoreSite Realty Corporation, CyrusOne, Inc., QTS Realty Trust, Inc., 365 Data Centers, UnitedLayer.
The growing trend of green data centers is anticipated to drive the market in the forecast period.
Increasing enterprise demands for cost-effective solutions to reduce overall IT costs, rising adoption of high-performance computing, and growing disaster recovery and business continuity requirements are some of the factors driving the data center colocation market.
North America is anticipated to dominate the data center colocation market in 2023.
The expected CAGR of the data center colocation market is 15.3%.
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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