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Global colocation demand holds firm in Q1 in face of Covid-19

First-quarter global market data from Synergy Research Group shows demand for colocation capacity from hyperscalers and edge compute providers is holding up, despite the pandemic

The growth of the global colocation market is holding firm despite the ongoing Covid-19 coronavirus pandemic, with the hyperscale cloud giants’ appetite showing no signs of waning.

That is according to Synergy Research Group’s latest quarterly look at global colocation market growth trends, which suggests a lot of the factors that were fuelling demand for datacentre capacity before the pandemic are continuing to influence the market.

In fact, the hyperscale operators continue to be the fastest-growing customer category for the colocation community, as the cloud and internet giants press ahead with their global datacentre expansion plans.

At the same time, demand for edge computing facilities within business districts continue to hold firm, the data shows.

“Colocation providers are major beneficiaries of this rapid datacentre facility expansion,” said John Dinsdale, chief analyst at Synergy Research Group.

“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.”

Synergy’s data shows that first-quarter revenue from the hyperscale segment grew far more rapidly than that accrued through the activities of enterprises and other categories of service providers.

The colocation market grew by 7% year on year overall during the first quarter of 2020 to $9.5bn, with revenue from hyperscale operators up 22% in the wholesale colocation segment and up 9% among retail colocation providers.

“Hyperscale operators continue to grow their revenues at double-digit rates and to maintain capital expenditure spend at $30bn per quarter, the majority of which is targeted at their datacentre infrastructure,” said Dinsdale.

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Service providers, which includes members of the telco, hosting and outsourcing community, as well as non-hyperscale cloud and internet firms, were the next fastest-growing customer category for the colocation community, followed by enterprises, said Synergy.

“Enterprise spending on wholesale colocation was relatively flat in Q1, while enterprise spending on retail colocation did continue to grow steadily,” it said in a research note.

For this reason, Dinsdale predicts that the hyperscale community will become an increasingly important source of new revenue for the colocation community over the next five years.

Synergy’s data also sheds some light on the colocation hubs across the globe that seem to be reaping the biggest benefits of these trends at the moment, with it name-checking the Asia-Pacific region as experiencing the strongest growth, followed by Europe, the Middle East and Africa (EMEA) and North America.

“Among the 20 largest country markets, the highest growth rates were achieved in China, South Korea, Brazil, Hong Kong, Japan, Germany and India,” the company said.

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