Three of the world’s largest colocation providers are growing much faster than the market as a whole, leading to rapid consolidation of the industry, according to the latest report from the Synergy Research Group.
Over the last four quarters, Equinix, Digital Realty and NTT have all seen their market share and revenue increase by 28 percent, thanks to a combination of major acquisitions and organic growth, while the overall colocation market added modest 9 percent.
There was accelerated growth among the rest of the Top 10, with CenturyLink, China Telecom, CyrusOne, DuPont Fabros, Global Switch, KDDI and Verizon all averaging 12 percent.
“In some senses colocation is following the same path as the cloud with market power gradually being concentrated in the hands of a few focused and deep-pocketed operators,” said John Dinsdale, chief analyst and research director at Synergy.
“In both cases the ability to run large data center operations effectively and efficiently is vital to success and companies that are too diversified or unfocused will struggle.
”And the similarities don’t stop there – as cloud usage continues to explode, colocation growth opportunities are pulled along in the slipstream.”
According to Synergy, in 2016 Equinix was the largest colocation provider in EMEA, Digital Realty dominated North America while NTT maintained leadership in Asia Pacific. The APAC market was identified as the fastest growing regional market.
Equinix was the largest provider of retail colocation while Digital Realty held a similar position in wholesale colocation. The report noted that both Digital Realty and NTT were set to increase investment in retail operations in 2017.
Researchers also highlighted the success of QTS and CoreSite, two smaller data center operators that were quickly ascending to the top of the food chain.
The report warned that consolidation will continue to be a major feature of the market, as evidenced by the recent announcement that Equinix is acquiring 29 data centers from Verizon, currently the second largest retail colocation provider in the US.