More and more organisations are recognising the significant advantages of using colocation services rather than attempting to operate their own data centres, and the global colocation market is predicted to grow significantly in the future.
According to the new report ‘Data Centre Colocation Market – Growth, Trends, and Forecast (2019–2024)’, the global data centre colocation market was valued at $28.3 billion in 2018 and is expected to grow significantly, reaching $52.54 billion by 2024, with a compound annual growth rate (CAGR) of 10.92 per cent during the forecast period (2019–2024).
It is hardly news that enormous amounts of data are generated today by organisations around the world, not least through an ever-increasing number of connected sensors, services, tools, and cloud and mobile applications. The increase in data generated has also increased demand for data centres around the world. Cisco estimates that annual global IP traffic for data centres will reach 20.6 zettabytes by the end of 2021, compared to 6.8 zettabytes in 2016. It is estimated that there is an annual increase in data generated globally of 35 per cent, which has long resulted in many organisations being forced to continuously expand their storage capacity significantly.
Difficult to achieve scalability on your own
In recent years, it has become increasingly clear that organisations are nevertheless facing a global scalability problem in their own data centres – prompting more and more of them to consider moving their hardware equipment to data centres operated by third-party providers – with many choosing this option (at least for now) over moving everything directly to the cloud. Colocation services have therefore become an attractive solution for many organisations, as they enable them to solve their storage challenges without having to incur significant upfront costs.
Colocation services are typically utilised by companies to house their equipment, such as servers and storage devices, in a professional data centre – while retaining control over the devices in the data centre. By connecting to various types of managed hosting, companies can also get help from the data centre provider to operate their IT infrastructure or utilise services such as administration or remote monitoring.
Lower costs favour colocation
The strong colocation trend is also driven by increasing demand from organisations that want to reduce their costs for storing and operating server equipment needed for storing and hosting services and applications. Colocation simply offers an optimised environment for organisations' equipment – with performance, power, cooling and security at a level that is very difficult to achieve on their own. Fast connections with high bandwidth and high redundancy in both connections and power are another very important factor in why more and more people are choosing to invest in colocation in high-performance data centres.
North America and Asia-Pacific are the largest markets for the colocation industry globally, accounting for nearly 80 per cent of the industry's total capacity, according to the survey. However, Europe is seeing rapidly increasing demand and is the region where colocation investments are expected to grow the fastest during the forecast period – and the increasing demand will make Europe a hot spot for colocation, taking an increasingly large share of the global market in the future.
