European Data Center Colocation Market (by Type, Enterprise Size, End-Use, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)
- Published: 15th Oct 2023
- Pages: 136
- Format : Pdf
Market Insight:
Data centre colocation refers to the process of a service provider renting a large amount of physical space, internet bandwidth, and network within an existing data centre in order to deploy the service provider's own data centre to store massive amounts of data and manage server operations for large businesses.
Furthermore, the adoption of cloud-based services by corporations and social media by consumers is propelling firms such as Facebook, Google, Amazon Web Services (AWS), and Microsoft to build hyperscale data centres throughout Europe. As a result, the increasing usage of cloud services in Europe is expected to aid in the rise of the data centre colocation market in the coming years. The European data center market is expected to reach US$17.95 billion in 2023, growing at a CAGR of 13.10% during the forecast period.
Segment Covered:
- By Type: In terms of type, the report identifies two segments of the European data center colocation market: Retail Colocation and Wholesale Colocation. The retail colocation held the highest share in the market. The segment is expected to grow at the highest CAGR in the forthcoming years as it offers flexibility in terms of IT infrastructure, which benefits small and medium-sized enterprises (SMEs), which increase its market share in the colocation of data centers across the region.
- By Enterprise Size: The report also offers he bifurcation of the market in the basis of the enterprise size: Large Enterprises and Small and Medium Enterprises (SMEs). The large enterprises held the largest share in the market. The market's expansion is aided by the growing adoption of colocation services among major cloud service providers and hyperscalers in the region.
- By End-Use: The report further provides the segmentation of the market based on the end-use: IT & Telecom, BSFI, Healthcare, Retail and Others. The IT & Telecom held the majority share in the market on account of rising demand for additional data storage capacity as a result of increased adoption of smartphones, laptops, tablets, gaming consoles, and other gadgets and benefits provided by data center colocation providers to the IT industry such as speed of deployment, waste and energy efficiency, and scalability.
Geographic Coverage:
According to this report, the data center colocation market in Europe is divided into several regions namely Germany, the UK, France, Russia, Italy, and the Rest of Europe. Germany held the maximum share in the market owing to digital transformation strategies, the adoption of cloud computing by enterprises, IoT, AI, implementation of GDPR, and COVID-19. The German market is further divided based on type namely, Retail Colocation and Wholesale Colocation.
In the UK data center industry, London is a major location for investment, with regions like Manchester, Slough, and Birmingham expecting to see significant investment in the years to come.
Top Impacting Factors:
Growth Drivers
- Soaring Demand for Data Center Colocation Among Small Businesses
- Surging Number of IOT Connected Devices
- Rising Cost of Operating a Data Center
- Rising Investments in Colocation Data Center
Challenges
- Dearth of Qualified Labor
- High Initial and Maintenance Costs
Trends
- Growing Execution of Artificial Intelligence
- Increasing Adoption of Cloud Services
- Expansion in IT & Telecom Industry
- Emergence of 5G Technology and Its Services
Driver: Soaring Demand for Data Center Colocation Among Small Businesses
The expansion of the telecommunications network and the rise in the number of new businesses centered on information technology have led to an increase in the demand for more rapid data processing and storage capacities. This is resulting in the adoption of digital technology and expansion of business operations by several small and medium enterprises (SMEs) across European economies. Owing to this, the demand for colocation services is increasing as it gives them a fantastic opportunity to expand their operations and infrastructure at significantly lower costs than would otherwise be possible. Therefore, the colocation data center supply has been increasing quarter on quarter during the recent years. Hence, soaring demand for data center colocation services among small business has fueled the European data center colocation market.
- Challenge: High Initial and Maintenance Costs
The cost required for the initial set-up of IT systems in the data center facilities is significantly high. The companies choosing to lease colocation services are required to procure their own IT systems. The companies also have to ship the IT systems to the colocation centers. The shipping price of the systems ultimately depends on the weight and size of the system. Firms that require high expanded storage facilities due to fluctuating data often find it costly to rent out data colocation centers. Moreover, these maintenance activities are conducted off-site at the data center location, which increases the related cost. The data center colocation plants are equipped with remote support for several maintenance activities and offer services such as smart hands and remote hands. However, these services also lead to the added cost for the enterprises. As a result, the additional startup and maintenance costs limit the adoption of data center colocation, thereby hampering the market growth.
- Trend: Growing Execution of Artificial Intelligence
Europe is one of the fastest growing countries regarding technological development and innovations. Today’s large manufacturing facilities deploying advanced artificial intelligence (AI) technologies accumulate tremendous quantities of data. The presence of well-known automobile manufacturers across Europe, such as BMW, Mercedes-Benz, and Audi AG are embracing these hi-tech solutions for process automation. The need for automotive data storage would fuel the need for high-quality wholesale colocation services. Considering that artificial intelligence is an advanced technology that would require improved network connectivity and reduced latency, the interconnectivity across Europe would also rise, presenting an excellent opportunity for colocation providers to localize their services. Hence, growing execution of artificial intelligence is anticipated to fuel the data center colocation market in Europe.
The COVID-19 Analysis:
Data center colocation market has benefited from the pandemic as data center colocation technologies help enterprises manage the rising needs of internet traffic. The demand for data centers grew significantly due to the pandemic and subsequent lockdowns across Europe, with a majority of the region's workforce shifting to remote working. In addition, companies from various industries came with more data space requirements to deploy their operations digitally on virtual space during the pandemic. The demand for colocation services led to strong utilization of existing data center space and drove revenues of service providers by over 10% in the initial two quarters.
Analysis of Key Players:
The European data center colocation market is highly fragmented, with significant players in end-user industries maintaining their data centers due to the ease of managing an IT staff and many other customizations. The key players in the European data center colocation market are:
- Verizon Partner Solutions
- Cisco Systems, Inc.
- Equinix, Inc.
- Digital Realty Trust, Inc.
- AT&T Inc. (AT&T Intellectual Property)
- NTT Communications Corporation
- Cyxtera Technologies Inc.
- Iron Mountain Incorporated
- CyrusOne, Inc.
- Telehouse International Corporation of Europe Ltd.
- AtNorth
- Global Switch Limited
- Verne Global
Some of the strategies among key players in the market for data center colocations are mergers, acquisitions, and collaborations. For instance, in April 2022, NTT Ltd announced significant advancements to its Managed Campus Networks service, a portfolio of consulting, technical, and managed services designed to deliver a seamlessly integrated campus network in the most demanding head office, branch, and manufacturing environments. In February 2022, Equinix Inc., had inaugurated MU4, a brand-new International Business Exchange (IBX) building, at Dywidagstrasse 10 in Aschheim. More than 2,250 square meters (24,200 square feet) of colocation space and more than 825 cabinets are available in the first phases of MU4.
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