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Global datacentre hub analysis reveals 65% of global colocation revenue originates from 25 cities

Latest quarterly report into global colocation market trends from Synergy Research Group shows hyperscale demand for datacentre capacity remains concentrated within major cities, despite push for more edge sites.

Almost two-thirds of the revenue generated by the global retail and wholesale colocation market can be traced back to the activities of operators in just 25 major cities, according to data from Synergy Research Group.

The analyst house’s latest quarterly “metro-level” probe into the state of the global retail and wholesale colocation market shows that 65% of the revenue generated during the second quarter of 2020 can be traced to the activities of operators in 25 city-based colocation hubs.

The five biggest hubs are London, New York, Shanghai, Tokyo and Washington, which collectively account for 27% of the global revenue generated by colocation operators.

Beijing, Chicago, Frankfurt, Silicon Valley and Singapore make up the rest of the top 10 colocation market metros and accounted for 15% of the revenue generated by the sector during the second quarter.

“There has been a lot of talk about the importance of building out edge networks and datacentres,” said Synergy Research Group chief analyst John Dinsdale. “While true, it is a fact that over 20 quarters, the top 25 metros have consistently accounted for 63-65% of the total market.”

This is notable, said Synergy Research Group, given the pressure on operators to expand into new geographies and more remote, edge locations.

Of the top 25 revenue-generating colocation hubs, 11 are in North America, nine are in the Asia-Pacific region, four are in Europe, the Middle East and Africa (EMEA) and one is in Latin America.

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Meanwhile, much of the revenue generated by the sector can be traced back to the “large and high-growth” hyperscale cloud and internet providers, which rely on the colocation community to provide them with ready access to fully kitted-out server farms within major cities, said Dinsdale.     

“We continue to see strong demand for colocation, with the standout regional growth numbers coming from APAC,” he said. “Revenue growth from hyperscale operator customers remains particularly strong, demonstrating the symbiotic nature of the relationship between cloud and colocation.

“The major economic hubs around the world are naturally the most important colocation markets, while hyperscale operators tend to focus their own datacentre operations in more remote areas with much lower real estate and operating costs.”

Dinsdale added: “These cloud providers will continue to rely on colocation firms to help better serve major clients in key cities, ensuring the large metros will maintain their share of the colocation market over the coming years.”

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