The global data center colocation market is expected to grow at a compound annual growth rate of 13.84% over the analyzed period to reach a market size of US$108,612.767 million in 2026 from US$43,838.252 million in 2019.
Data Center Colocation is a practice of outsourcing in-house server equipment in a third-party data center. Under this, instead of occupying a room or section in the organization's infrastructure area, space is rented in a data center where the equipment is co-located. Many businesses opt for this outsourcing option to utilize their own data centers for more productive activities that contribute to the expansion of their business. While some use this cloud service to rapidly scale data capacity according to business cycle fluctuation. The main difference between public cloud and colocation is the method employed to store and manage data. Except that, both are similar. However, at times construction of physical centers is more cost convenient for a business requiring additional storage when data expands.
Data Center Colocation is economical and has a huge potential in small and medium enterprises.
The key developer in the growth of the data center colocation market is the increasing adoption of technology in small and medium enterprises that facilitates their growth and development. Small and medium enterprises or as known as SMEs, are growing in number and operations, making a huge economic impact. These SMEs are adopting data center colocation to outsource and save cost. Since these colocations are shared facilities, companies share the cost of power, data floor space, cooling, personnel, and others, reducing the cost of operations. Moreover, they reduce the cost of the requirement of data centers, providing benefits of bandwidth. Furthermore, data collocated centers provide higher protection and security from power failures and robbery with the adoption of data backs and high-security systems. They also provide a higher level of physical protection along with full control to the business over its equipment. Hence data centers are economical in terms of facilities and cost. SMEs with high financial constraints can opt for this alternative, instead of investing in public cloud or data centers.
Data Center Colocation is not suitable for business with a large quantum of expanding data.
It is observed that data center colocation is not suitable for business firms that require high expanded storage facilities due to fluctuating data and growing operations. And at times construction of new data centers is more cost convenient for such business, than to rent out in data colocation centers. This highly constrains the market for the data center colocation industry.
To install its networking equipment in third-party data centers, firms purchase cloud storage subscriptions with limited storage cloud space. If firms require, they can buy additional space by paying some cost. Troubles occur when the firm continuously has to buy additional storage, which increases the cost of the subscription. the total cost of rent subscription might become greater than the cost of operations of a data center, which drives away the market. Moreover, public cloud services also limit the market for data center colocation as they are similar and substitutable, especially for enterprises requiring less space.
The Asia Pacific region to hold a significant market during the forecasted period.
Based on geography, the market is segmented into North America, South America, Europe, the Middle East and Africa, and the Asia Pacific regions. The Asia Pacific region is anticipated to dominate the market during the forecasted period. The prime reason driving the growth in the region being mushrooming small and medium enterprises along with growing technology adoption.
COVID-19 Pandemic and Data Colocation industry.
The coronavirus pandemic had a positive impact on the data center colocation market. with the economic slowdown, companies intend to outsource the non-core operation to reduce financial constraints. The lockdown had severely affected businesses, financially impacting them. Hence, instead of installation of new data centers, which require high initial costs, businesses are looking for third-party service providers for cost-cutting. DuPont announced the acquisition of Immediate, a provider of cloud, colocation and management services operating in South Carolina, North Carolina, Indiana, and Ohio with 8 data centers in early 2021. The prime aim behind this agreement is to bring edge interconnection colocation and data centers into tier 2 and tier 3 markets.
