A Colocation center (or colo) offers dedicated facility, where a business can physically house their servers and other equipment. Businesses can rent the space, as opposed to locating their servers or other computing hardware in their offices, for greater network reliability and uptime. Colocation helps in increasing business potential by reducing operational expenditure and maximizes the ability to focus on the core business. When it comes to resilient connectivity at a reasonably low cost, colocation aids business connect securely, faster and globally. The solution further offers enterprises with a wide range of opportunities, with a typical service level agreement. Thus colocation provides enterprises with exceptional level of risk management and an opportunity to spend in superior quality equipment and futuristic servers. Colo often enables companies to avoid investing on storage bills e.g. in cloud, as it is affordable to store data on their dedicated servers. The colocation data center market worldwide is anticipated to reach $51.9 billion by 2020. Furthermore, the segment would register a CAGR of 12.4 during the forecast period 2015 -2020.
Enterprises today are vigorously consolidating the smaller facilities and server rooms, restoring them with bigger centralized centers, augmented by both colo and cloud services. Outside of hosting, such data facility services are conventionally divided into wholesale and retail data center leasing options. When retail colo is discussed, a business leases a dedicated space within a facility, usually a caged ‐ off center or a rack. However, in wholesale colocation a tenant tends to lease the complete built space. Although not always, oftentimes tenant is responsible for managing all information technology operations in that center.
The particularly fragmented colocation center market can be segmented into two; the retail colocation and wholesale colocation. In 2014 the retail colocation segment occupied a major share i.e. nearly 2/3 of the global colocation market. Besides this, to give a bottle neck competition, wholesale colo providers have started focusing on SME’s that require 500KW-1000KW. The wholesale colo business is expected to register a CAGR of 13.7 percent during the period 2015 -2020.
By End User
The colocation market by end ‐ user is divided into small and mid ‐size enterprises (or SME’s) and large enterprises. These larger enterprises generally include sectors like BFSI (also known as BFSI), healthcare and life sciences, information technology and telecommunication and so on. Large enterprises largely contribute to the global colocation market revenue & dominate the market as these organization choose colocation services on a much larger scale. However, SME’s is expected to witness enhanced growth as more and more small enterprises would rely on retail colocation services.
By Industry Vertical
Data center colocation observes a great demand in telecommunication and information technology, due to the rising density of data servers. Colocation market earns a maximum chunk of its revenue from this vertical. Furthermore, the energy sector are also relying on the data center operation to meet different regulatory norms. Additionally, recent digitalization techniques adopted by the energy vertical would persuade the industry to register a CAGR of 14.3 percent during the period 2015 ‐ 2020.
Demographically, the industry serves regions including North America, Europe, Asia ‐Pacific and LAMEA. The Asia ‐Pacific region for colocation is anticipated to add close to 24.9 percent of the total business for data center through 2015 ‐ 2020. Furthermore, the region is expected to register a CAGR of 14.3 during the period. The economic growth rate has been majorly responsible for the demand by nations located in the Asia ‐Pacific region and would witness more and more enterprises relying on colocation hosting. In addition, in close competition to Asia-Pacific, LAMEA region would also grow at a decent growth rate.
Partnerships and collaboration have remained some of the principal strategies adopted by prominent colo vendors. Global giants are also seen entering into agreements to capitalize on the rising demands. Besides this, the segment is gaining traction among the enterprises that are weary of the information technology woes. Recently, many aligned data facilities have started applying the cloud pricing model to colocation service. Several major players are eyeing smaller colo providers for potential acquisitions.
Colocation Market Segmentation and Scope
By End User
By Industry Vertical
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