The U.S. data center colocation market is projected to grow at a CAGR of 12.77% to reach a value of US$24.888 billion by 2025, from US$12.101 billion in 2019.
The U.S. is a leading market for data center colocation. The data center colocation market is being driven by rapid growth of industries and increasing focus of enterprises towards cost reduction. Advanced Information Technology (IT) infrastructure available in the US is also supporting the growth of the market. Datacenter colocation helps in reducing both capital and operating costs, thus aiding the companies in remaining competitive. Exponential growth in data generated per day from business functions across industries is driving with it the need for more data center space for efficiently storing it. Since total cost of ownership of a data center is high and maintenance of these facilities accounts for a significantly large chunk of the total costs, colocation is continuously gaining popularity among them. Although cloud is also an option, colocation is witnessing a continuous increase in demand from end users who have huge volumes of classified or sensitive data with very high value attached to it. Increasing focus of companies on migrating most of their workloads to off-premise servers without giving third-party vendors access to their data is also increasing the adoption of colocation among end users. Furthermore, stringent regulations regarding data protection in many countries like China are pushing enterprises to store data within a specified political boundary. China’s data law, for instance, requires enterprises operating in China to keep customers’ data within the boundaries of China. This has led to many technology companies to store their data within the country. Since owning a data center is very expensive and other options are available, colocation being one of them is gaining popularity, which is driving its market growth.
Wholesale Colocation Model holds a significantly large share
By colocation model, the U.S. data center colocation market has been segmented into wholesale and retail. In retail colocation, enterprises lease required space with a data center, while in wholesale colocation the company leases large portion or the entire data center space while it may not be managing it. Wholesale model holds a significantly large share in the U.S. market on account of presence of a large number of companies which require a large data center space for storing huge volumes of data. Many companies across industries like communication and technology and retail hold large spaces in colocation data centers on account of huge volumes of data traveling through their networks every day. The popularity of retail colocation model is rising in the U.S. market on account of growing small and medium-sized enterprises which usually operate with limited budget. Most of the small and medium-sized enterprises with increasing number of digitized business functions are focusing on leveraging on retail colocation spaces for their business. Presence of a good number of players in this market is making wholesale colocation affordable even for small and medium-sized enterprises. Companies are looking for types of colocation centers that offer them both colocation models as this will help them in maintaining a good blend of both of these types, thus aiding the companies in business expansion.
Communication and technology industry holds a notable market share
By industry, the U.S. data center colocation market has been segmented into communication and technology, BFSI, government, healthcare, manufacturing, media and entertainment and others. Communication and technology industry holds a significantly large share in this market on account of presence of a good number of companies in this country. Favorable business environment for this industry in this country is bringing many new start-ups which are expected to contribute to the market growth over the projected period. The market growth in other industries is expected to remain solid over the forecast period.