Data Center Colocation Market Growth & Trends

The global data center colocation market size is expected to reach USD 104.77 billion by 2027, expanding at a CAGR of 12.9% from 2020 to 2027, according to a study conducted by Grand View Research, Inc. Colocation is the practice of renting infrastructure and space for servers and various storage devices at a third-party provider’s facility. Colocation providers provide enterprises with infrastructure, along with other related services, such as physical security, networking, and power and cooling components. Reduction in the overall IT cost, enhanced security for the data, free maintenance of servers, and predictable yearly or monthly costs are motivating enterprises to adopt colocation services.

Rising adoption of online shopping is anticipated to upkeep the market growth over the next few years. Rising number of online shoppers directly translates to an increased volume of data across the retail industry. Large volume of data has led to increased investments in IT infrastructure, especially in data centers. In order to save IT costs, more and more retailers are opting for colocation centers, which is driving the market in the retail sector.

Increasing number of smartphone users has led to a large volume of data for telecom operators to manage. Considering the rising disposable income in developing economies, the number of smartphone users is bound to rise, which will result in additional volume of data. Telecom operators are opting for colocation centers to minimize their IT expenditure and manage data efficiently, thus fueling the market growth. However, security concerns among customers can hinder the market growth over the forecast period. Colocation providers are offering additional services such as facility monitoring over CCTV cameras to gain the trust of their customers.

Data Center Colocation Market Report Highlights

  • By colocation type, the wholesale segment is projected to expand at the fastest CAGR of 16.2% over the forecast period as global companies, such as Microsoft Corporation and Oracle Corporations, are renting wholesale colocation centers for their servers
  • On the basis of enterprise size, the SMEs segment is expected to expand at the fastest CAGR of 15.5% from 2020 to 2027. This is due to the cost reduction benefits offered by colocation providers for SMEs that rely on digital infrastructure for their business growth
  • Based on end use, the IT and telecom segment held the largest market share of 26.58% in 2019.This is attributed to escalating number of mobile internet users, which has led to a rise in the volume of digital data
  • The market is characterized by intense competition owing to the presence of several large organizations. Key players in the market are focused on expansion of their geographical presence to sustain competition.