canjoena - stock.adobe.com

Hyperscale demand for colocation offsets softening take-up from enterprises, research shows

Latest quarterly tracker data from Synergy Research Group highlights the positive impact the hyperscalers are having on the global colocation market, at a time when enterprise demand for their services appears to be softening

The hyperscale cloud giants appear to be helping the colocation market offset the softening demand for their services from enterprises, data from Synergy Research Group suggests.

According to the market watcher’s latest quarterly datacentre market tracker, firms in the hyperscale cloud and internet service provider sector are the fastest-growing category of customers for colocation operators.

“For both wholesale and retail colocation, 2018 revenue from hyperscale customers grew much more rapidly than revenues from other service provider customers and from enterprises,” said Synergy Research Group in a statement.

Its data further shows the global colocation market grew by 10% in 2018 overall, thanks in no small part to the appetite for datacentre capacity demonstrated by the hyperscalers, which includes the likes of Amazon, Microsoft, Google and Facebook, over the course of the previous year.

As such, the revenue generated by the hyperscalers moving into colocation facilities rose 24% year-on-year in the wholesale segment of the market, and by 16% in the retail sector.

In contrast, demand from enterprises for colocation – particularly of the wholesale variety – appears to be softening, with Synergy reporting flat year-over-year growth in this sector. However, enterprise spending on retail colocation rose 7% during the same time period.

“On both the retail and the wholesale side of the colocation market, revenues from hyperscale customers are growing much more rapidly than revenues from customers in other industry verticals,” said John Dinsdale, chief analyst at Synergy Research Group.

Read more about colocation and hyperscale growth trends

“As cloud services continue to grow strongly over the next five years, and as hyperscale operators continue to expand their global networks, they will become ever more important to the leading colocation providers.”

Synergy’s data suggests the colocation market is now valued at more than $34bn globally, with the Asia-Pacific region the greatest source of growth over the past year, followed by Europe, the Middle East and Africa, and North America.

“It comes as no surprise that hyperscale operators are providing a boost to colocation providers, as they are on a charge to rapidly extend their worldwide datacentre footprint and, in 2018, ramped up their capex by no less than 43%,” said Dinsdale.

“To support this rapid growth, they cannot just build their own datacentres, so they also need to rely on colocation providers to lease out both large wholesale facilities and capacity at smaller edge locations.

“Hyperscale operators are becoming an ever-more important source of business for leading colocation companies such as Equinix, Digital Realty, Interxion, CyrusOne, QTS and GDS,” he said.

Read more on Datacentre capacity planning

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close