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Colocation to be worth $33bn by 2018

Fast growth predicted by 451 Research 

The global colocation market will be worth $33.2 billion by 2018, according to a prediction by 451 Research.

In Q4 2015, the data center colocation market reached a rate of $27.0 billioni in annualized revenue, and this will continue to grow over the next two years, according to the latest release of 451 Research’s quarterly Datacenter Knowledgebase (DCKB) release, which tracks nearly 4,800 datacenters operated by 1,286 companies worldwide. The majority of colocation revenue (54.6 percent) is derived from smaller local providers with less than $500 million in annualized colocation revenues, says the company.  

Graph business figures chart growth market research

Source: Thinkstock / Wavebreakmedia Ltd

Record breaking

“2015 was a record year for the datacenter, hosting, and managed services sector, with the highest number of deals since we began tracking it,” said Kelly Morgan, 451 Research’s research director for North American data centers, “but there are still hundreds of datacenter providers around the world that will continue to consolidate, either to gain scale or add services or both.”

Consolidation doesn’t mean the industry is in trouble, as the move to the cloud is driving demand for leased data center space higher., said Morgan. It is simply a sign of a maturing industry.

Equinix is the market leader with eight percent of the wholesale and retail colocation market, followed by Digital Realty with 5.6 percent, according to 451 Research.,

Interestingly, when put in order of floor space, Digital Realty is ahead, with 7.8 percent of world’s colocation data center space. The total area of colocation data center space in the world will grow from today’s 132.4 million sq ft to 176.5 million sq ft by the end of 2018, says the research report. 

“Colocation is quickly becoming the nexus of both cloud and enterprise IT,” says Katie Br, research director, 451 Research. “The colocation market is serving as datacenter arms dealer to both enterprises and the cloud. In this process, colocation is often becoming the strategic connection point between the two.”

The biggest region for colocation is now Asia Pacific with 40 percent, which has a huge economy to serve, and the advantage of leapfrogging the rest of the world since it has less legacy enterprise data center space to compete with colocation. 451 Research also notes that some some Asian countries have been supporting their colocation industries with special zones and tax treatment. North America has 33.7 percent of the total, while Europe, Middle East and Africa accounts for another 22%. The remaining 4% of space is in Latin America.

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