Asia Pacific Data Center Colocation Market size is estimated to be over USD 15 billion in 2019 and is expected to register a growth of 17% over the forecast timespan. The growth can be attributed to the increasing demand for colocation services from SMBs in the region.
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The rise in the number of small and medium scale businesses in Asia Pacific has driven the demand for retail colocation services. The Federal Reserve Bank of San Francisco stated that in 2019, startups & SMEs accounted for 82% of the total employment in South Korea. The businesses operating in the country are shifting to digital work mode from manual. This operational shift is supported by the rapid cloud adoption by SMEs. However, the huge upfront cost of building in-house data centers along with complexities in running in-house data centers is driving the regional data center colocation market growth. In retail colocation, companies rent cabinet space, cage or rack for the deployment of their own IT equipment. Retail colocation is targeted toward startups and small businesses as they do not require large rented spaces offered by wholesale providers. The increasing number of SMEs will support the Asia Pacific data center colocation market growth over the coming years.
Ongoing data center infrastructure development projects in several countries will boost the colocation industry. In March 2020, Equinix Inc. opened its fourth data center in Singapore with an investment of USD 74 million offering around 4,000 square meters of colocation space. The developing industrial sector coupled with the advent of digitalization has spurred the demand for technologically advanced data centers for efficient information management and transfer. Several government initiatives in Japan, India, South Korea, and China are encouraging advancements in the industrial sector for economic development, fueling the data center colocation market growth.
The coronavirus (COVID-19) pandemic negatively impacted the data center colocation market in the first half of 2020 due to lockdown measures imposed in several countries. However, with industrial activities regaining traction, the market will witness high growth. Educational institutions conducting online lectures and corporate employees working remotely to ensure social distancing will boost the demand for efficient solutions for data traffic management. In April 2020, Alibaba Cloud invested USD 28 billion over the next three years in building high-performance data centers to speed up covid-19 recovery and help digital transformation.
The robust manufacturing industry will adopt advanced technologies to streamline operations, driving the Asia Pacific data center colocation market. China was a major exporter of electronic components and goods to several countries worth more than USD 102 billion in 2019. Electronics industries in countries, such as Japan and China, adopt advanced manufacturing techniques to automate the process, resulting in a huge amount of digital data. Industries are focusing on automating manufacturing processes by replacing human labor with machines. The surging amount of data traffic leading to the rise of the data center industry will fuel the demand for colocation services.
Key players operating in the market include China Telecom Corporation Limited, CyrusOne Inc., Cyxtera Technologies Inc., Digital Realty Trust Inc., Equinix Inc., Zayo Group Holdings Inc., and NTT Communications Corporation Limited. The players are undertaking strategic initiatives, such as mergers & acquisitions, to strengthen and expand their industry presence. For instance, in August 2020, Equinix Inc. expanded its market presence in India by acquiring the operations of GPX Global Systems, Inc. The acquisition will extend Platform Equinix’s operations in the country with the addition of two highly interconnected data centers, offering a platform for additional expansion across India.