Investment on Colocation to be $33 billion worth by 2018!

Global Colocation Market spending will touch $33 billion mark by 2018 says a survey report of 451 Research. The study estimated that in the fourth quarter of 2015, the data center colocation market reached a rate of $27.0 billion in annualized revenue and this will continue to grow over the next two years.

451 Research included respondents from around 4,800 data centers operated by 1,286 companies worldwide to prepare the said estimate. The majority of colocation revenue is derived from smaller local providers with less than $500 million in annualized colocation revenues, says the company.

“The year 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.

He added that 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. This is simply a sign of a maturing industry”, said Mo Tahmasebi, CEO and President of DNF Corporation which offers Data Center Infrastructure deployment and management services.

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

Impressively, when the floor space is taken into account, Digital Realty is ahead, with 7.8% of world’s colocation data center space. The total area of colocation filled data center space in the world will grow from today’s 132.4 million square feet to 176.5 million square feet 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.”

451 Research says that 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. This is due to the fact that the governments in 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 data center colocation space is in Latin America.


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