Data Center Colocation Market Dynamics and Developments by 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

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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 Regional Insights

The regional trends and factors influencing the Data Center Colocation Market throughout the forecast period have been thoroughly explained by the analysts at Insight Partners. This section also discusses Data Center Colocation Market segments and geography across North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America.

Data Center Colocation Market Report Scope

Data Center Colocation Market Players Density: Understanding Its Impact on Business Dynamics

The Data Center Colocation Market market is growing rapidly, driven by increasing end-user demand due to factors such as evolving consumer preferences, technological advancements, and greater awareness of the product's benefits. As demand rises, businesses are expanding their offerings, innovating to meet consumer needs, and capitalizing on emerging trends, which further fuels market growth.

Market players density refers to the distribution of firms or companies operating within a particular market or industry. It indicates how many competitors (market players) are present in a given market space relative to its size or total market value.

Major Companies operating in the Data Center Colocation Market are:

1. Equinix Inc.
2. IBM Corporation
3. AT&T Inc
4. Cyxtera Technologies, Inc
5. Digital Realty Trust LP
6. CoreSite Realty Corporation

Disclaimer: The companies listed above are not ranked in any particular order.

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