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The growing global demand for data storage is being increasingly served by colocation data centers, according to a new report by BCC Research. Colocation data centers would meet the needs of financial services and other industry sectors with regards to increased scale, lower IT costs and managing increased technology complexity. 

These trends would be driving a global colocation market that is anticipated to expand at a compound annual growth rate (CAGR) of 15.4% between 2016 and 2020, when the market will be worth an estimated $54.8 billion, according to the report published by BCC Research, ‘Colocation Data Center Industry: Global Markets to 2020.’

Growth of the colocation data center industry can also be tied to the expansion of companies providing cloud and colocation services into new areas, particularly in China and Singapore, which are increasingly joining the movement toward increased storage in highly scalable, cost-efficient data centers.

Equinix, Digital Realty, NTT Data

Globally, leading colocation companies mentioned in this report include Equinix, Digital Realty, NTT Data, Century Link, Level 3, Verizon, Cyrus One, Dupont Fabros, Telehouse and Global Switch, among others.

“The global colocation data centers market is relatively fragmented, with only a few global players having more than a 5% market share,” said Michael Sullivan, Research Senior Editor, BCC. “The top five competitors in the market accounted for 21.1% of the total market in 2016. Equinix was the largest company with 8.5% of the market.”

North and South America accounted for 54.3% of the colocation data center market in 2016, followed by Europe, the Middle East and Africa (28%) and the Asia-Pacific region (18%). In the Americas, the United States hosts a major share of the global data center market, while in the Asia-Pacific region, Japan is the largest market for data centers.

Edge Computing

The report published by BCC Research makes recommendations for companies looking to profit in the global data center colocation market. Chief among those is inorganic expansion or entry into the market, which is seen as an effective way to increase global outreach and consumer bases.

Another strategy for expanding outreach, the report said, is to enter or expand into emerging markets where growth potential is high due to rising digitization and government regulations. A focus on edge computing and partnership with cloud operators can guarantee stable revenues, while offering additional services such as interconnection and firewall management can help companies stand out. Finally, the high demand for retail colocation space would be providing high margins for market players.