What Does the Future Look Like for Colocation?
The future looks bright when it comes to data center colocation. The annual revenue for the global colocation market is expected to continue its upward trajectory but the key will lie in local markets as competition heats up.
According to a recent report by 451 Research, the global colocation data center market is expected to reach $36 billion by the end of 2017. Current annual revenue is $22.8 billion. In the same time period, the global footprint should encompass nearly 150 million square feet in space, which is a growth or more than 40 million square feet. That is a lot of opportunity for data center providers to capture.
- What should these potential customers expect to see trending in the industry?
- Why should they adopt colocation into their business plan?
The data center market is highly driven by the popularity of the cloud. As more companies move their infrastructure to the cloud, they look to have their hardware live off-site as well, and for that, they need a data center. Utilizing the data center allows companies to focus on their main business goals and frees up their in-house IT staff to focus on business applications while the data center handles all of the daily maintenance tasks associated with IT and IaaS.
Another trend emerging in the colocation industry is consolidation. Currently, the industry is highly fragmented and smaller companies may look to consolidate to mend this fragmentation and compete at a higher level. According to the study by 451 Research, the majority of colocation facilities are locally operated and the providers only have one to three facilities. These colo data centers are not able to compete with the larger, more geographically diverse providers. Take for instance, Expedient’s fiber connected 11 geographically diverse data centers. Customers can have access to their local colocation facility but then have backup across their platform and further diversify with disaster recovery at yet another location, all connected via Expedient’s 100 Gbps fiber optic ring.
North America houses about 43 percent of the world’s total operational space for colocation. The North America data center colocation market is in the midst of an interesting trend because providers are split on how to focus their attention. This is good for market competition. Some providers are focusing on their core markets, expanding existing space, while others are entering emerging markets. Expedient is doing both.
In 2015, Expedient opened its second data center in the Columbus, Ohio, area, a city in which success has been proven and is now necessary to invest in expansion there. Expedient also ventured into new territory by opening a data center in Memphis, TN.
With the expected growth in the data center colocation market, there will be opportunity and competition in the future and it should prove to be an exciting time for the industry. The data center providers willing to listen to the market and grow with their customers will be the ones to succeed.