When 451 Research revealed that the colocation and data center market was going to skyrocket to a $36 billion global industry by 2017, that statistic took the headlines—but there was actually much more information revealed in the study. According to the Data Center Knowledge Base (DCKB) study, which considered almost 1,100 data centers in North America, Europe, the Middle East, Latin America and the Asia Pacific region, “This remains an extremely fragmented industry.” Even though right now the market hovers close to $23 billion in revenue each year, research director Kelly Morgan says, “The majority of colocation facilities are provided by local operators with only one to three facilities each. However, it is becoming harder for them to compete with the more geographically diverse providers that are now entering many local markets. We will see continued consolidation in this sector.”
In fact, during the first quarter of 2015, it was found that a whopping 74.8 percent of this multi-billion dollar revenue was drummed up by “neighborhood” providers who boast under $50 million in yearly colocation revenues each. One of the biggest colocation providers is Equinix, which specializes in retail and wholesale colocation. This company snags over eight percent of the worldwide wholesale/retail revenue every year. Next up is Digital Realty, a company that largely focuses on wholesale. They come in at number two, scooping up 5.65 percent, yet really win at “leadership” because they take up almost ten percent of “operational square footage” on a global scale.
Which Matters More: Money or Size?
In the world of colocation service providers, both are important. That’s why 451 Research predicts that on a global scale, operational square footage will be on the rise by 2017, too. At the moment, colocation takes up almost 109 million square feet, but that will be almost 150 million square feet by the time 2017 comes to a close. Another researcher, Katie Broderick, says, “Colocation continues to be the bedroom for much of Cloud 2.0. The global colocation market is the physical (facilities and networking) underpinning of both enterprises’ off-premise computing, and hosting and cloud service providers’ value-add services.”
It’s estimated that right now, under 50 percent of the global, complete operational space earmarked for colocation is located in North America at around 42.6 percent. This “operational space” is defined as a physical space that supports IT equipment. The second biggest region in operational square footage alone is the Asia-Pacific region, which claims about 26.5 percent of the space. Europe takes the bronze at 26.36 percent of the square footage, and the rest is in Latin America at 4.5 percent. However, 2015’s Q1 is the first time the Asia-Pacific region has taken up such a large chunk, researchers say more needs to be done to understand why the Asia-Pacific region is undergoing such a growth spurt. It’s estimated that general economic growth is the reason, along with minimal in-country competition amongst each other.
The Data Center Knowledge Base is committed to tracking data for wholesale data centers around the world. This will be done in order to provide those in the industry with the capability information and facility capacity data necessary for expansion and investment planning. Dubbed the most comprehensive, authoritative source on data center intelligence in the industry, the researchers use over 100 metrics and data points to provide these statistics. Primary sources are used, including numerous on-site visits and aggressive outreach for validation purposes.
Tracking the growth and changes throughout 2017 can help colocation service providers as well as clients plan for their next move, whether it’s expansion or going with a different provider for more personalized results. However, one thing will remain unchanged: More space and more money will be necessary to provide clients with the kind of support and services they need. As vulnerabilities open up, from more threatening hackers to the need for more sophisticated technology, colocation providers have no choice but to keep up with demands.