Data Center Colocation Market to Experience Significant Growth in the Near Future

A colocation is a data center facility in which equipment, space, and bandwidth are given as rentals to customers. It is fast becoming a buzzword, especially in companies with midsize IT requirements. It helps in reducing costs, provides storage space and advanced infrastructure, reducing power consumption, providing greater bandwidth, cooling, security to the server and networking equipment, and better management of the staff and employees. Looking at these advantages, organizations are choosing colocation centers over building their own data centers, thereby boosting the growth of the data center colocation market, globally.

Market Drivers & Restraints

The growth of the global data center colocation market is being primarily influenced by the following factors:

  • Rising adoption rate of cloud computing
  • Reduced capital expenditure
  • Improved disaster recovery capabilities

Increasing penetration of cloud computing has benefited colocation in a way that it becomes easy to store and manage the organization’s data. Moreover, increase IT spending is also likely to offer ample growth opportunities in the near future. However, higher initial start-up costs, fluctuating costs of operational expenditure, and fear of loss of direct control over the servers that is making the organizations reluctant in adopting colocation services, are some of the factors that may hamper the growth of this market.

Market Scenario

The value of the global data center colocation market which was estimated to be USD 25.70 Billion in 2015 is expected to hit USD 54.13 Billion by 2020, growing at a CAGR of 16.1% during the forecast period. Among regions, North America is expected to lead the market over the forecast period with highest share, owing to the advancing technology and rise in IT capacity requirement. However, the market in Asia-Pacific is expected to grow at the highest CAGR between 2015 and 2020, whereas in MEA and Latin America, the market is still in introduction phase.

Based on type, the wholesale colocation market is gaining attention, and is expected to grow at a considerable pace during the projected period, owing to its benefits like reduced power, cooling costs, and total ownership costs. Among end-users, large enterprises are expected to dominate the market with highest share, owing to advancements in technology across North America and Europe. However, the segment of SMEs is expected to register the highest growth from 2015 to 2020.

Equinix Inc., Coresite Realty Corporation, Centurylink, Inc., Digital Realty Trust, Verizon Terremark, Internap Corporation, AT&T, NTT Communications, Telecity Group, and Interxion are some of the key players involved in the market for data center colocation.

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Research Scope

The analysis and forecasts for the global market for data center colocation has been done on the basis of following segmentation:

  • Type: Wholesale Colocation, Retail Colocation
  • End-User: Small & Medium Enterprises, Large Enterprises
  • Vertical: Telecom & IT, BFSI, Government & Public Sector, Healthcare, Energy, Others
  • Geography: North America, Europe, Asia-Pacific, Middle East & Africa, Latin America

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