North America Data Center Colocation Market share was worth around USD 20 billion in 2019 and is expected to grow at a CAGR of 13.5% from 2020 to 2026.
 

Get more details on this report - Request Free Sample PDF

The rising data traffic and the need for efficient systems are encouraging companies to invest in upgrading and transforming traditional IT facilities to mega facilities, driving the North America data center colocation industry growth. The construction of new projects and facility modernization are transforming the IT infrastructure framework into highly automated facilities. This has led to an increase in the size & number of electrical devices in an IT environment and the overall expenses. Companies are depending on colocation service providers for reducing additional expenses, that is driving the data center colocation market growth.

The presence of a large number of colocation data centers and cloud service providers in North America will drive market growth. Companies are focusing on improving their hybrid multi-cloud strategies to serve customers effectively. For instance, in July 2020, Equinix, Inc. and Google LLC introduced Equinix Cloud Exchange Fabric and Google Anthos solutions to simplify application migration for customers shifting to the cloud. The integration of Google Anthos will allow colocation customers to use advanced Kubernetes-based tooling to manage workloads hosted in colocation facilities.

North America is witnessing a severe COVID-19 outbreak. Large companies, such as Amazon Inc., Facebook, Inc., Google LLC, and Microsoft Corporation, implemented remote working policies for their employees. The strong telecom infrastructure in the region is also supporting the adoption of video conferencing and content streaming services. The rise in the usage of content delivery applications is creating a demand for low-latency access to process and store data. Limitations of on-premise data centers have encouraged businesses to shift toward colocation data centers for their ability to quickly develop and scale up easily.

The market for retail colocation services is witnessing growth in data center colocation market. Retail colocation providers with the ability to accommodate large footprints, provide managed services, carrier, & cloud connectivity, and on-site staff will drive the data center colocation market growth. Retail colocation data centers enable small & large enterprises to expand their IT infrastructure footprint while ensuring data security and operational reliability. Service providers also offer blended internet access or access to public cloud providers and carriers. Redundant power supply up to 100kW, 200kW, 500kW, or 1MW and improved network security enable small enterprises to have flexibility with less up-front CAPEX.

The increasing complexities in data management and rising internet traffic are motivating large enterprises to opt for colocation data center services. In-house data centers can lead to power capacity issues for large companies mainly when upgrading to IT applications that demand high-density power. Colocation facilities provide access to a more robust power-per-square foot ratio than the majority of private data centers, allowing businesses to harness the power of virtualization and high-density computing. This also enables organizations to reduce costs and increase their operational efficiency.

The application of colocation data centers in the government & defense sector is increasing as organizations are increasingly leveraging the power of digitization. Federal authorities are integrating advanced technologies, such as AI, automation, mobile, and cloud, to better serve citizens. For instance, in February 2020, the Department of Defense (DoD) stated that it will adopt a detailed set of rules, governing the implementation and development of AI across the U.S. Military. A rise in digitization and the adoption of innovative solutions in the sector will drive the demand for colocation data centers that support high-speed data processing.

The key players operating in the North American market are CyrusOne, Equinix, Inc., Digital Realty, Global Switch Corporation, and KDDI Corporation. These players are developing several solutions to target large enterprises where the demand for colocation solutions is very high owing to the need for storing massive amounts of data. Market players are adopting several strategies to capture the demand and requirement of customers such as product differentiation, mergers, acquisitions, collaborations, and new product developments.