The proliferation of cloud data services is sparking change in the colocation space, as providers seek new strategies — to both survive and thrive — in the face of “virtual” competition. For companies looking at best practices for storing and accessing data, and considering a transition to cloud, these shifts are well worth noting before making a move.
Colocation providers understand that the cloud is slowly but surely gaining traction on a wide variety of services. From a deal-making perspective, we are seeing two main transactional categories. First, existing colocation tenants are opting for short-term renewals as they move to cloud. Second, corporations that previously maintained in-house data centers are moving into colocation facilities with the intent to downsize their number of racks in phases as they move their data to the cloud. Then there are other tenants who skip the colocation phase, go straight to the cloud, and find it more expensive than owning their own site. These users are finding the cloud to be expensive and that is mostly because of how the user operates and manages the service.