Rising Data Creation and Consumption Fuel the Data Center Colocation Services Market Worldwide, states Frost & Sullivan

The global colocation services market is projected to reach $164.84 billion by 2030 from $51 billion in 2020, expanding at a 12.4% compound annual growth rate (CAGR).
Market growth is mainly driven by the rising demand from hyperscale data centers, increasing investments in the market, increase in data creation/consumption, and high volumes of data traffic fueled by emerging technologies.
Hyperscale cloud providers and content and digital media segments are expected to drive data center colocation growth in the coming years.

Frost & Sullivan’s recent analysis reveals that the global colocation services market is projected to reach $164.84 billion by 2030 from $51 billion in 2020, expanding at a 12.4% compound annual growth rate (CAGR). Market growth is mainly driven by the rising demand from hyperscale data centers, increasing investments in the market, a significant increase in data creation and consumption, and high volumes of data traffic fueled by emerging technologies, such as 5G, the Internet of Things (IoT), and more.

In APAC, hyperscale cloud providers and content and digital media segments are expected to drive data center colocation growth in the coming years. Demand from the financial services vertical will drive the sustained growth of the data center colocation landscape in the region. The market in Europe is experiencing strong growth, most of which is driven by the FLAP (Frankfurt, London, Amsterdam, Paris) markets. Europe is also using built-to-suit facilities that are specifically designed for hyperscalers. In the United States, the market is primarily driven by the increased focus on digital infrastructure and technology innovations relating to 5G, IoT, edge computing, and more.

“Increased adoption of advanced processors and servers to cater to growing data creates a need for new infrastructure solutions,” said Gautham Gnanajothi, Energy & Environment Research Director at Frost & Sullivan. “Companies are moving toward these new technologies at a rapid pace. Several hyperscale providers are expected to adopt advanced processing technologies, necessitating advanced cooling and power solutions.”

Gnanajothi added: “Rapid adoption of hybrid cloud is increasingly becoming the key focus area in enterprise cloud strategies. Further, while hyperscale cloud providers lead the way in sustainability initiatives, colocation providers are following suit and focusing on sustainability.”

To tap into growth opportunities, market participants should focus on the following areas:

New product development for market expansion: Data center original equipment manufacturers (OEMs) should set up local research and development (R&D) labs to promote area-based technology research and deliver products suited for local markets.
Geographic expansion for revenue acceleration: Market participants can partner with data center operators to push products and solutions in the various regions they are planning to build facilities.
Edge and modular data centers for latency needs: Data center operators should partner with global telecom operators for direct access to edge data centers, which will allow stakeholders to understand edge data center technology and field test their new products.
Capitalize on cloud growth for revenue diversification: Data center outsourcing companies can offer cloud solutions to grow this revenue stream and reduce the impact of cannibalization on traditional data center services.

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