Owing to the high costs of owning and maintaining private data centers, the popularity of date center colocation is rising sharply. A colocation data center is basically any data center facility that rents out space to various third-parties so that they can store their network equipment and servers. As many businesses do not have the resources required for maintaining their own data centers, they are increasingly choosing this service. Moreover, this service is very beneficial for businesses that create large but inconsistent volumes of data, primarily because of the increasing adoption of the internet of things (IoT) and artificial intelligence (AI) in their operations.
Besides the aforementioned factor, the growing demand for edge data centers is also creating lucrative growth opportunities for the players operating in the data center colocation market. Edge data centers are basically small data colocation facilities that are located near the businesses or at the edge of the network. These centers are connected to several facilities or bigger centers that process the data centrally with the help of analytics and machine learning and provide cloud computing services.
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Furthermore, the growing adoption of the internet of things (IoT), rapid 5G network deployment, soaring data gap, and surging popularity of augmented reality (AR)/virtual reality (VR), video streaming, network function virtualization (NFV), and software-defined networks (SDN) is also fueling the expansion of the data center colocation market, as a result of which, the revenue of the market surged to $42.1 billion in 2019. Additionally, the market will demonstrate a CAGR of 14.8% from 2020 to 2030, as per the forecast of the market research firm, P&S Intelligence.
Retail colocation and wholesale colocation are basically two types of data colocation services provided by colocation data centers. Between these, the demand for wholesale colocation services is predicted to rise at a faster pace in the coming years. This is credited to the burgeoning demand for large storage spaces and cloud by large enterprises for efficient data management and storage. Additionally, these facilities offer various advantages, such as strategic colocation, reduced total cost of ownership (TCO), higher power capacity, and higher bandwidth.
Geographically, the demand for data center colocation is predicted to be the highest in North America in the coming years. This will be due to the surging number of data centers and colocation service providing companies in the region. Moreover, the region is home to the headquarters of many leading technology firms, such as Facebook Inc., Amazon.com Inc., and Google LLC, which is further boosting the requirement for data center colocation services there.
Hence, it can be said with confidence that the demand for data center colocation services will soar across the world in the forthcoming years, mainly because of the high costs of owning and maintaining private data centers, generation of large volumes of data by various large and small and medium enterprises, and rapid digitization of business operations.