New data from Synergy Research Group shows that hyperscale operators are the fastest growing customer category for colocation providers. For both wholesale and retail colocation, 2018 revenue from hyperscale customers grew much more rapidly than revenues from other service provider customers and from enterprises. While the overall colocation market grew by 10% in 2018, revenues from hyperscale operators grew by 24% in the wholesale segment of the market and by 16% in the retail segment. Other types of service provider were the next fastest growing customer category, followed by enterprise customers. Enterprise spending on wholesale colocation was relatively flat in 2018 compared to 2017, while enterprise spending on retail colocation grew by 7%.
Synergy’s Q4 and year-end data shows that the total colocation market grew to over $34 billion in 2018. Growth was strongest in the APAC region, followed by EMEA, and North America. Among the 20 largest country markets, the highest growth rates were achieved in China, Brazil, Hong Kong, Japan, Germany, and Singapore. The analysis of colocation spend by customer category is an extension of Synergy’s in-depth quarterly tracking of the colocation market. Hyperscale operators comprise the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce. The other service provider category includes telcos, non-hyperscale cloud providers, and internet service firms, hosting/outsourcing companies and content & digital media service providers. The enterprise category includes all other industry verticals plus government and the public sector.
“It comes as no surprise that hyperscale operators are providing a boost to colocation providers, as they are on a charge to rapidly extend their worldwide data center footprint and in 2018 ramped up their capex by no less than 43%,” said John Dinsdale, a chief analyst at Synergy Research Group. “In order to support this rapid growth they cannot just build their own data centers, so they also need to rely on colocation providers to lease out both large wholesale facilities and capacity at smaller edge locations. Hyperscale operators are becoming an ever-more important source of business for leading colocation companies such as Equinix, Digital Realty, Interxion, CyrusOne, QTS, and GDS.”