Data Colocation Market Trends

Data Colocation Market Overview

The Data Colocation Market is projected to grow from USD 52.14 billion in 2024 to USD 126.39 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 11.70% during the forecast period (2024 - 2032). Additionally, the market size for Data Colocation was valued at USD 45.95 billion in 2023.

Rising requirements for reliability, security, and scalability of infrastructure, rising concerns of several industries and enterprises regarding IT infrastructure budget, rising data center complexities, increasing costs involved in owning a large infrastructure facility, and rising demand for hybrid cloud and virtualization technologies are the key market drivers enhancing the market growth.

Data Colocation Market Trends

Increasing penetration of advanced technologies is driving market growth.

Market CAGR for data colocation is driven by the growth of immersive techniques like augmented reality, artificial intelligence, virtual reality, and 5G technology, which has further contributed to the need for delivering larger bandwidths for data transfer across institutions. The continuous usage of several disruptive technologies, including IoT, autonomous cars, cloud computing, and sophisticated robotics, is a factor driving the increasing demand for colocation in data centers.

Additionally, the increasing adoption of cloud data centers, due to decreased costs, is anticipated to fuel market growth. SMEs are increasingly embracing cloud services due to eliminating the requirement for IT staff, scalable low costs, and having lesser overheads. Several prominent companies in the market have been growing different strategic initiatives, including partnerships, acquisitions, and mergers, among others, to get adequate traction in the market. For instance, in May 2022, Cyxtera revealed its colocation solution delivery in India, performed by a strategic collaboration with Sify Technologies Ltd. As a part of this collaboration, Sify Technologies Ltd. will resell Cyxtera's solutions to more than 10,000 consumers.

The requirement for high-capacity networks has increased with the improvement in edge-computing applications. Businesses are also moving toward the cloud, which formed the demand for seamless data transfers and more immediate data processing. These solutions deliver a step towards cloud migration, which allows market growth. However, certain cons, which contain being a shared facility and requiring more control over the location, promotions, and servicing control by the firm, may hinder growth. On the other hand, adequate connectivity, redundant power supply, improved network security, and bursting capability outweigh the cons of data center colocation, room for growth, drawing businesses and revving the data colocation market revenue.

Moreover, setting up a unique data center facility needs a large amount of initial investment and improves the overall CAPEX of the companies. Thus, companies are increasingly becoming considerate of the CAPEX expended on commissioning mission-critical data center talents and are looking for ways to decrease cost and enhance Return on Investment (ROI). This force to cut IT expenditure is a significant catalyst that enables enterprises to analyze new IT infrastructure options. Thus, enterprises are increasingly switching to data center colocation providers for power, bandwidth, space, and Value-Added Services (VAS), such as internet solutions, interconnection services, and skilled managed IT services based on their size and need.

Data Colocation Market Segment Insights

Data Colocation Service Type Insights

The global data colocation market segmentation, based on service type, includes small-scale and large-scale. The large-scale segment dominated the market, accounting for 35% of market revenue (78.48 Billion). Major cloud service delivers have been moving towards colocation, aimed at targeting large enterprises, due to their broader customer base, which would develop a large volume of data and the requirement for large commercial space for keeping the servers. However, small scale is the fastest-growing category as it enables businesses to rent smaller spaces within a data center, which permits businesses to manage smaller volumes of data and needs limited infrastructure.

Data Colocation Components Insights

The global data colocation market segmentation, based on components, includes network hardware, server & storage, cooling units, and others. The server & storage category generated the most income due to the increasing adoption of cutting-edge and cloud connectivity. However, network hardware is the fastest-growing category due to the high demand for the growing government regulatory, compliance, and security requirements.

Data Colocation End-User Insights

The global data colocation market segmentation, based on end-user, includes BFSI, healthcare, government & defense, IT & telecom, and others. The healthcare category generated the most income (70.4) as healthcare organizations are moving from legacy infrastructure to off-premises, more suitable network uptime with the redundancy of colocation service providers, decreased operational costs and adequate resource allocation. However, on-premises is the fastest-growing category due to numerous strategic endeavors undertaken by major companies aimed at improving the telecom and data center colocation ecosystem.

Data Colocation Regional Insights

By region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. The North American data colocation market will dominate owing to various factors, such as enhancing digital infrastructure, rapid digitalization, the existence of top data center colocation providers, and the increasing number of data centers set up will boost the market growth in this region. Further, the US data colocation market held the largest market share, and the Canadian data colocation market was the fastest-growing market in the European region.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Europe's data colocation market accounts for the second-largest market share due to increased investment from hyper-scale cloud providers, and colocation service providers will boost the market growth in this region. Further, the German data colocation market held the largest market share, and the UK data colocation market was the fastest-growing market in the European region.

The Asia-Pacific data colocation market is expected to grow at the fastest CAGR from 2023 to 2032. This is due to rising data center complexities, increasing costs of owning a large infrastructure facility and rising demand for hybrid cloud and virtualization technologies in this region. Moreover, China’s data colocation market held the largest market share, and the Indian data colocation market was the fastest-growing market in the Asia-Pacific region.

Data Colocation Key Market Players & Competitive Insights

Leading market participants are financing heavily in research and development to develop their product lines, which will allow the data colocation market to grow even more. Market players are also undertaking various strategic activities to extend their global footprint, with significant market developments including recent product launches, contractual arrangements, mergers and investments, higher acquisitions, and partnerships with other institutions. To extend and stay in a more competitive and advancing market climate, the data colocation industry must deliver cost-effective items.

Manufacturing locally to minimize operating costs is one of the key business tactics manufacturers utilize in the global data colocation industry to benefit clients and increase the market sector. Major players in the data colocation market, including SunGard availability services (U.S.), DuPont Fabros Technology, Inc. (U.S.), Equinix, Inc. (U.S.), American Telephone & Telegraph, Inc. (U.S.), and others, are attempting to expand market demand by investing in research and development operations.

Google LLC, a Alphabet Inc. subsidiary, provides search and advertising services online. The company's business areas include advertising, search, platforms and operating systems, and enterprise and hardware products. Its portfolio of products and services includes Google Search, Google Chrome, Google Docs, Google Photos, Google Calendar, Google Meet, Google Drive, Google Finance, Google Play Books, Google News, Google Earth, Google Ad Manager, Google Play, AdMob, Google Maps, AdSense, Gmail, Google Groups, and YouTube. In February 2023, Google declared a collaboration with StarHub. StarHub will examine Google Cloud's data management, ML, and AI instruments for its network operations and expand the consumer experience as part of the partnership.

CyrusOne LP provides data center services. The Company offers connectivity, implementation, hosting, disaster recovery space, information technology infrastructure consulting, network design and performance, managed IT, and network security services. CyrusOne serves clients worldwide. In January 2023, CyrusOne cultivated an office complex in Frankfurt, Germany, preparing to turn it into a data center campus. The investment group Corum had sold the Europark office complex in Frankfurt for EUR 95 million before confirming that CyrusOne was the buyer.

Key Companies in the Data Colocation market include

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  Equinix Inc. (US) CenturyLink, Inc. (US.)

  
  


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  SunGard availability services (US.)

  
  


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  Global Switch Corporation (UK.)

  
  


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  Verizon Communication, Inc. (US.)

  
  


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  KDDI Telehouse Corporation (Japan)

  
  


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  Fabros Technology, Inc. (US.)

  
  


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  Interxion Holding NV (Netherlands, Europe)

  
  


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  DuPont and American Telephone & Telegraph, Inc. (US.)

  
  

Data Colocation Industry Developments

December 2022: HGC Global Communications has agreed with Digital Realty to boost consumers' edge connectivity. Under the agreement, Digital Realty will utilize edgeX by HGC services for over-the-top (OTT) consumers in its three Singapore data centers.

November 2022: Colovore declared setting up its second data center site in Santa Clara. The recent data center setup will provide 9MW high-density liquid-cooled colocation power, which features 50kW per rack capabilities.

March 2020: Digital Realty received Interxion for $8.4 billion. The acquisition aims to complete the colocation demands and requirements for companies. Interxion is a Netherland-based organization that delivers carrier and cloud-neutral colocation data center services.

Data Colocation Market Segmentation

Data Colocation Service Type Outlook

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  Small Scale

  
  


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  Large Scale

  
  

Data Colocation Components Outlook

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  Network Hardware

  
  


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  Server & Storage

  
  


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  Cooling Units

  
  


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  Others

  
  

Data Colocation End-User Outlook

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  BFSI

  
  


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  Healthcare

  
  


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  Government & Defense

  
  


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  IT & Telecom

  
  


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  Others

  
  

Data Colocation Regional Outlook

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  North America

  
  

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  US

  
  


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  Canada

  
  

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  Europe

  
  

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  Germany

  
  


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  France

  
  


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  UK

  
  


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  Italy

  
  


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  Spain

  
  


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  Rest of Europe

  
  

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  Asia-Pacific

  
  
  
  
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    China

    
    
  
  
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    Japan

    
    
  
  
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    India

    
    
  
  
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    Australia

    
    
  
  
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    South Korea

    
    
  
  
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    Australia

    
    
  
  
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    Rest of Asia-Pacific

    
    
  
  
  
  


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  Rest of the World

  
  
  
  
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    Middle East

    
    
  
  
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    Africa

    
    
  
  
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    Latin America