Data Center Colocation Market

Data Center Colocation Market Highlights

The global data center colocation market is expected to cross a value of USD 156.5 billion by the end of 2032. The market was valued at USD 61.6 billion in 2023 and is expected to expand at a CAGR of 14.2% between 2024-2032.

• Over the mid-term, the growing need for IT infrastructure is the primary factor anticipated to drive the global data center colocation market.
• The surge in concern for high cost of ownership is a major factor to challenge the market growth.
• The North America data center colocation market is projected to dominate the global market.

Data Center Colocation Market Outlook

A service that allows businesses to rent space, resources, and infrastructure in a third-party data center facility is often known as data center colocation. Commonly referred to as colocation or colo, organizations can collocate their servers, storage, networking equipment, and other hardware in a professionally managed and secure facility.

As per our analysts, one of the major factors predicted to drive the growth of the data center colocation market is the growing need for IT infrastructure for running businesses. Modern day businesses are rapidly adopting cloud computing technologies. This has resulted in an increase in demand for scalable, flexible, and cost-effective infrastructure, which in turn, is generating opportunities for the growth of data center colocation market. Our researchers believe that spending on global cloud computing is expected to touch USD 730 billion by the end of 2024, an increase of about 3X from the value registered during the COVID-19 period. China Telecom Corp. Ltd., Cologix, and Colt Technology Services Group Ltd. are some of the significant parties in the global market for data center colocation.

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Data Center Colocation Market Drivers – Analyst’s Observation

According to the analysts at KD Market Insights, some key growth drivers for the global data center colocation market are:

• Surge in Initiatives for Digital Transformation: In the awake of COVID-19, the pandemic has brought in a new urgency for meeting digital transformation goals. Businesses globally have expedited their process of digital transformation to modernize their IT infrastructure and enhance agility. Our researchers have concluded that companies and organizations around the globe have spent more than a trillion US Dollars on digital transformation post the COVID-19 pandemic, and this is projected to touch near to USD 4 trillion by 2026. The growing initiatives of the businesses for digital transformation, supported by increasing investments is therefore projected to generate numerous opportunities for market growth in the coming years.
• Numerous Benefits Associated with Colocation Services: As data center colocation services are shared services, hence, the service providers can offer these services at a lower price-point. Businesses can benefit from shared infrastructure, economies of scale, and flexible pricing models. The scalability of colocation services allows organizations to expand or contract their IT footprint based on changing requirements without the capital investment associated with building dedicated facilities.

Which Probable Factors Could Hamper the Growing Data Center Colocation Market Trend?

As per our KD Market Insights analysis, some of the challenges expected to limit the global market growth of data center colocation are:

• Concern for High Initial Upfront Costs: The installation, setup and migration expenses, which fall under the initial setup costs, are usually very high for data center colocation. This may act as a barrier for some businesses for whom the budget is a constraint.
• Concern for High Cost of Ownership: The data center colocation service model is undoubtedly cost-efficient for the users who use these services. However, the service providers who provide these services, may have concerns about the total cost of ownership over the long term as compared to other hosting models, as the tenure of attaining breakeven may increase, depending on certain market volatilities.

How is the Global Data Center Colocation Market Segmented?

Our experts at KD Market Insights have segmented the global data center colocation market as:

What are the Probable Factors Influencing the North America Data Center Colocation Market Forecast?

The North America data center colocation market is majorly driven by the presence of several cloud service providers (CSPs) and small and medium-sized enterprises (SMEs) who are deploying colocation data centers, especially in the United States. In addition to this, the surge in investments in IT infrastructure and data centers, supported by digital transformation initiatives, followed by the rapid adoption of cloud services, including infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS), along with the growing proliferation of Internet of Things (IoT) devices and edge computing are all expected to contribute to the market growth in the region.

As per our analysts at KD Market Insights, the following five players lead the North America data center colocation market growth:

• Equinix, Inc.
• Digital Realty Trust, Inc.
• CyrusOne Inc.
• CoreSite Realty Corporation
• Cologix, Inc.

Which Key Players Top the Global Data Center Colocation Market Share?

As per our analysts at KD Market Insights, the competitive landscape of global data center colocation market facilitates our readers in identifying their closest competitors. The manufacturers who are associated with data center colocation market are raising their focus on expanding their presence, as well as their market share. The market has also been witnessing an upward movement in the number of collaborations between research institutions and key players, aimed at introducing advanced technologies and innovation of new products. Here is a list of the key players who top the global data center colocation market share:

• China Telecom Corp. Ltd.
• Cologix
• Colt Technology Services Group Ltd.
• CoreSite
• CyrusOne
• Cyxtera Technologies,Inc
• Digital Realty Trust
• Equinix,Inc.
• Flexential
• Iron Mountain Inc.
• NTT Ltd.
• Rackspace Technology
• Telehouse
• Zayo Group,LLC

What are the Recent Developments Observed in the Data Center Colocation Market?

Over the years, the experts at KD Market Insights have been observing the recent developments associated with global data center colocation market trends. Our expert’s market forecast analysis has recorded the market players adopting plentiful of key strategies including new product launches, mergers & acquisitions, and collaborations.

For instance, Cyxtera announced a strategic partnership with Sify Technologies Ltd. for offering its colocation solutions in India. As per the deal, the latter would resell the solutions of Cyxtera in the APAC, Europe, and North America markets.

Further, Web Werks, in association with Iron Mountain, stated that they have launched its first greenfield data center in Navi Mumbai, India. The data center which is spread over a 120 thousand square feet campus is a tier 3 data center that has a total gross power capacity of 10MVA.