Synergy: Wholesale and Retail Colocation Benefitting from Hyperscalers

Bit Ninja

Synergy Research

New data from Synergy Research Group shows that hyperscale operators are the fastest growing customer category for colocation providers globally. For both wholesale and retail colocation, first quarter revenue from hyperscale customers grew more rapidly than revenues from other service provider customers and from enterprises.

While the overall worldwide colocation market grew by 7% in Q1 compared with 2019, revenues from hyperscale operators grew by 22% in the wholesale segment of the market and by 9% in the retail segment. Service providers were the next fastest growing customer category, followed by enterprise customers. Enterprise spending on wholesale colocation was relatively flat in Q1, while enterprise spending on retail colocation did continue to grow steadily.

Synergy Research’s data shows that the total colocation market on a global scale grew to $9.5 billion in Q1. 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, South Korea, Brazil, Hong Kong, Japan, Germany and India.

Major Cloud and Internet Service Firms

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 ecommerce. 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.

“Hyperscale operators continue to grow their revenues at double-digit rates and to maintain capex spend at $30 billion per quarter, the majority of which is targeted at their data center infrastructure,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “As part of that they rely on colocation providers to lease out both large wholesale facilities and capacity at smaller edge locations. Hyperscale operators continue to become an ever-more important source of business for leading colocation companies such as Equinix, Digital Realty, NTT, CyrusOne, QTS and GDS. This market has remained mostly unaffected by COVID-19.”

Cologix