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How are Green Data Centers Going to Affect Data Center Colocation Market?

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Ritik Sinha
How are Green Data Centers Going to Affect Data Center Colocation Market?

The data center colocation market generated a revenue of $42.1 billion in 2019 and is expected to advance at a 14.8% CAGR during the forecast period (2020–2030). Data coalition settings rent out physical spaces to enterprises for storing their IT servers that utilize the network connection and electricity supply of the data center. The market is growing due to the disaster mitigation offered by colocation services, high ownership costs associated with private data centers, rising cloud on-ramp adoption, and enormous growth in data generation. 


Based on type, the data center colocation market is bifurcated into wholesale colocation and retail colocation, between which, the retail colocation type held the larger share of the market in the past. These solutions enable services providers to serve a high number of customers with managed services, on-site staff, and cloud connectivity and carrier services. These services are usually used by companies that do not deal with large amounts of data, need limited storage for a limited time, and have no plans for data expansion. 


Read Full Report: Data Center Colocation Market Revenue Estimation and Growth Forecast Report


On the basis vertical, the data center colocation market is categorized into manufacturing, banking, financial services, & insurance (BFSI), research & academics, energy, healthcare, retail, government & defense, and IT and communications. Among these, the IT and telecom sector held the largest share of the market in past, as the surging adoption of enhanced technologies, including AI, IoT, and cloud computing, are leading to high generation of data. Owing to this, IT and telecom companies are taking data center spaces on a rental basis. 


The Asia-Pacific (APAC) region is projected to witness the highest CAGR during the forecast period, majorly because of the rapid developments in the IT and telecom and healthcare industries in developing countries in the region. The increase in the requirement for temporary server and data storage in the region is growing, as a large number of IT firms from across the globe are outsource their processes to APAC-based companies.  


A major factor leading to the growth of the data center colocation market is the high cost of private data centers. The cost of maintaining private data centers is extremely high, particularly for enterprises that the amount of data that is being generated is not consistent. With the adoption of AI and IoT and swift digitization, a large amount of data is being generated that needs to be managed and stored efficiently and in a cost-effective manner, thereby leading to the growth of the market. 


A major trend being registered in the data center colocation market are green data centers. Because of increasing concerns about air pollution, due to the high emission of greenhouse gases from industries, the focus on attaining energy efficiency has risen significantly. This is resulting in the rising popularity of green data centers that provide the same functionalities and benefits as a traditional facility, only at considerably lower electric consumption. 


In conclusion, the market is being driven by the high cost of private data centers and the rising demand for green data centers across the globe. 


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