451 Research projects the global colocation market will reach $33.2bn by 2018 in its latest quarterly Datacenter Knowledgebase (DCKB) release, which tracks nearly 4,800 data centers operated by 1,286 companies worldwide.
In Q4 2015, the data center colocation market saw $27.0bn in annualized revenue. The majority of this revenue (54.6%) continues to be derived from local providers with sub-$500m in annualized colocation revenues.
“2015 was a record year for the data center, hosting, and managed services sector, with the highest number of deals since we began tracking it. But there are still hundreds of data center providers around the world that will continue to consolidate, either to gain scale or add services or both,” noted Kelly Morgan, research director, North American Datacenters, 451 Research. “This is not because the industry is in trouble; the move to cloud continues to drive strong demand for leased data center space. It is because the industry is maturing, and providers are becoming more strategic in their approach to customers.”
Among the largest providers, Equinix is the market leader in the combined wholesale and retail colocation market with a share of 8.1% of global annualized wholesale and retail colocation revenue. Digital Realty, primarily a wholesale provider, is the second largest supplier in terms of revenue at 5.6%, but leads the global market in terms of operational square feet with a 7.8% share globally. 451 Research estimates that the global colocation market will grow in terms of total operational square feet from today’s 132.4 million square feet to 176.5 million by the end of 2018.
“Colocation is quickly becoming the nexus of both cloud and enterprise IT,” says Katie Broderick, research director, 451 Research. “The colocation market is serving as data center arms dealer to both enterprises and the cloud. In this process, colocation is often becoming the strategic connection point between the two.”
451 Research estimates that today, the world’s largest region in terms of total operational space for colocation (space supporting IT equipment) is Asia Pacific (40.1%). Growth in APAC has been fueled by the sheer size of the economy and a less entrenched installed base of enterprise facilities with which colocation providers must compete. In addition, some Asian countries have been supporting their colocation industries with special zones and tax treatment. North America is second largest with 33.7% of total, global operational square feet, while Europe, Middle East and Africa accounts for another 22.1%. The remaining 4.1% of space is in Latin America.