About the Report
The global data center market is expected to reach a valuation of 209.8 Bn by 2031.Growing interest towards technologies such as private cloud, edge, and colocation has been fuelling the demand for data centers and their solutions. Present-day data centers represent state-of-the-art cooling systems and high density servers. They offer myriad services that are made accessible to even the smallest of start-ups. The exponential rise in data consumption and data generation by organizations across various industries has been fuelling the demand for reliable and highly available data centers.
In its new study, ESOMAR-certified market research and consulting firm Future Market Insights (FMI) offers insights about key factors driving demand for data centers. The report tracks the global sales of data centers in 20+ high-growth markets, along with analyzing the impact of COVID-19 on the global adoption of data centers, along with the pre-COVID and post-COVID market growth analysis.
What are Future Projections for Data Centers Market in Comparison to Historical Pattern?
Between 2016 and 2020, global data center market registered a CAGR of 5.5%. The increasing adoption of small and mid-scale data centers has been enabling growth across various sectors.
Growth is also expected to accelerate amid the pandemic as the COVID-19 outbreak has pushed organizations towards digital transformation, thanks to the surge in remote working calls and the need for rapid mobilization of cloud computing to cope with a rise in demand for data.
Countries across the world reported intensified data demand during the pandemic, which underscored the importance of digital technology and data centers. Owing to these factors, the data center demand is likely to increase, expanding at a CAGR exceeding 7.4% throughout the 2021-2031 assessment period.
How Data Center Colocation will Impact Market Growth?
Data center colocation is a data center facility in which a business can rent space for equipment such as servers and other computing hardware. Data center colocation providers offer building (space), cooling, power units, bandwidth and physical security for customers to install their own servers and storage. Colocation provides a high-performance environment for critical IT infrastructure. Rather than managing a data center, customers can focus more on their core business by collocating their data servers and take the benefits of 100% uptime SLA.
Additionally, colocation provides dedicated, private connection options to hundreds of network, cloud, and IT service providers to help streamline the architecture. Moreover, choosing a colocated, multi-tenant data center allows companies to scale their environments according to their specific needs. Also, splitting the expenses of space and equipment with other companies offsets costs. Thus, various small and mid-sized companies are entering into this market space, which would in return will drive the growth of data center market.
Market Research Methodology - Perfected through Years of Diligence
A key factor for our unrivaled market research accuracy is our expert- and data-driven research methodologies. We combine an eclectic mix of experience, analytics, machine learning, and data science to develop research methodologies that result in a multi-dimensional, yet realistic analysis of a market.
Increasing Internet Bandwidth & Use of Data Consumption Enabling Data Center Market Growth
Globally, the internet continues to transform to how one connects with others, organize the flow of things, and share information. The internet has a huge influence on individual consumers and large economies alike. It has become an increasingly vital part of our day-to-day life. As per Cisco analysis, nearly two-thirds of the global population will have Internet access by 2023. There will be 5.3 billion total Internet users by 2023, up from 3.9 billion in 2018. In the developing countries like Indonesia, Internet traffic will grow 4.9-fold from 2016 to 2021, a compound annual growth rate of 37%.
Developing countries are exhibiting high demand for social media, television, video content streaming, e-Commerce, and net banking, all of which require robust IT infrastructure and data networks. This has been supporting growth of IT infrastructure and data centers are at the heart of this growth. These countries also represent a key markets for several local and multinational data center providers and tech giants.
How is Internet of Things (IoT) Transforming Data Centers?
Over the past few years, technological advancements are continue to occur at a high pace, allowing faster processing of data and enabling vast amounts of data storage. The introduction of IoT technology has totally transformed the design and deployment of data centers in the last two decades. It is estimated that IoT will include 35 billion units installed by 2022.
The deployment of IoT will generate large quantities of data that need to be processed and analyzed in real time. As more data is generated there will be a corresponding growth in demand for storage space.
Not only will this drive the demand for data centers but will lead to the advent of innovative ways for optimizing storage capacity with better servers and newer compression technologies, which would bring several growth opportunities for data center providers.
High Cost of Data Centers Continues to be a Key Challenge
One of the major factors hampering growth and adoption of data centers is the high cost associated with them. The cost associated with the manufacturing of servers and integration of all the components into one aggregately adds up to the cost, owing to which the overall cost of the product increases.
Thus, in spite of the low service costs and long life cycle of the product, the adoption of data centers has been restricted.
Improvement in Service Delivery and Risk Management to Mitigate Concerns
Organizations across the world are changing their service delivery models to succeed in today’s fast-paced business landscape, which is aligned to meet the needs of both the internal and external business environment. Present-day organizations provide a more dynamic and flexible infrastructure, which provides a better chance to discover and acknowledge new business opportunities.
Organizations of all sizes are seeking global expansion with the help of emerging technologies and large consumer bases, thereby increasing the need for improved security and resiliency measures. Organizations are equipped with a high number of networking products and services in order to improve the service delivery and risk management.
How is the U.S. Data Center Adoption Trend?
Until 2020, data center sales across the U.S. reported a Y-o-Y growth of over 2.7% to reach US$ 32.15 Bn. The market is set to further aggrandize at a CAGR of nearly 4.5% through 2031. The U.S. has emerged as a highly lucrative market owing to surging demand from hyperscale cloud providers.
The data center shipment is increasing in the country due to the rising popularity of moving localized data center activity to colocation or cloud facilities. Moreover, the market is likely to experience a rise in edge data center computing to deliver services with low latency and high efficiency across the country.
According to current study, South Eastern U.S. is one of the major contributors to the U.S. data center market. States such as Virginia, Arizona, Illinois, Nevada, California, Texas, Ohio, Tennessee, Iowa, and North Carolina have received significant investments in recent years related to data center.
How Lucrative is U.K. for Data Centers Market?
With the fear of Brexit in their minds data center operators in the U.K. are shifting their infrastructure abroad. Brexit has brought several uncertainties among cloud providers in terms of storage and retrieval of customer data. European companies that are associated with the U.K. data center market are migrating workloads to Germany, Netherlands, France and other EU countries.
However, the UK is the leading colocation services market in Europe and comprises over 250 operational colocation data centers. According to the Tech Nation, in 2019, the UK tech industry received a funding of around US$13.2 billion to drive innovations and digitalization in the business sector. The growing demand for data center services from business and consumer end users are driving investment in UK data center market. The U.K. data center market is estimated to reach a valuation of 7,379.0 Mn by the end of 2031 by registering a CAGR of 10%.
China to Offer Incremental Opportunities to Data Center Providers
China is estimated to record an incremental opportunity worth US$ 14.85 Bn during the forecast period. China Telecom, China Mobile, and China Unicom are currently owning most number of data centers in the country, leveraging their operational history in the space.
China is focusing on taking the lead over global peers in data center construction with larger enterprises looking to scale up their data centers for ensuring the stability and reliability of data services as the application of 5G, internet of things, artificial intelligence generates the demand for computing power. Much of this growth has come from widespread adoption of data centers by government agencies during the last decade.
Alibaba announced in April 2020 that it would invest around US$ 28.26 Bn on its cloud infrastructure. Investment by some of the leading players is expected to aid the overall expansion of the market in China.
How Lucrative is India Data Center Market?
India is estimated to register a high growth at a CAGR of 9.8% during the forecast period owing to growing investments towards the development of digital economy coupled with increased investor interest and stable long-term returns.
The rise in digital adoption set to fuel explosive growth for data center market in India. The increasing spending on smart cities is resulting in the growing need for IT infrastructure which is leading to the development of data centers in the country.
Leading tech players are continuously investing in India Data Center market space. For instance, Amazon is expected to invest US$1.6 billion towards the construction of two hyperscale Data Centres in Hyderabad. Moreover, Microsoft is planning to integrate its Azure cloud platform with Reliance Jio’s proposed Data Centres in Maharashtra and Gujarat.
The telecom industry in India is witnessing the high growth with a CAGR of 10% and is estimated to record the incremental opportunity worth US$ 2.7 Bn during the forecast period.
How Big is Scope for Data Center Market in Brazil/
Brazil has been exhibiting strong growth owing to the increasing penetration of cloud vendors, government regulations for local data security and increasing investments by players is driving the growth in positive direction. Moreover, the introduction of the General Law of Protection of Personal Data (LGPD) in August 2020, is expected to increase the cloud service and data centre service adoption in the country.
As per Cloudscene, there are almost 120 data centres in the country. Moreover, according to Brazilian Software Association, Brazil is Latin American’s largest technology ecosystem. According to estimates the IT investment in Latin America witnessed growth by around 4% to 5% in 2020. This is expected to provide a massive boost to cloud computing, and hence will generate the demand for data center market.
Which Data Center Type Dominated in 2020?
The small data center type has emerged dominant and accounted for a market share of 46.4% in 2020 owing to presence of a large number of small and medium enterprises (SMEs) globally as compared to large enterprises. The rise in number of SMEs globally has resulted in the increasing demand for small data centers that cater to the customized business needs of small enterprises. These enterprises do not require large data center spaces due to limited IT requirements and budgetary constraints.
However, the term small data center does not always means the implementation of a data center in a small business. Even large enterprise do create and deploy multiple small data centers within its premises, depending upon the business needs and operational feasibility. The deployment of small data center can save tens of thousands of dollars simply through efficient choices in management practices, IT hardware, power, and cooling infrastructure.
How big is the Opportunity for Data Center Manufacturers in the Media and Entertainment Industry?
By industry, media and entertainment industry is expected to show significant growth in the coming years, while IT and Telecom is expected to remain dominant through the forecast period. The demand for cloud and social media services showing no sign of decline, several tech players are investing in the construction of more of these massive facilities. There were more than 500 data centres that could be classified as hyperscale at the end of 2019, and another 151 are scheduled for construction in 2020.
These facilities will be crucial to managing the massive amounts of data generated by media and entertainment industry, big data social media analytics, and the information being gathered by IoT devices, which provides huge opportunities for data center manufactures to cater in media and entertainment industry.
Which Hardware Component is Highly Sought-after?
By hardware component, data center racks is expected to register the high CAGR of 9.2% throughout the forecast period, owing to growing number of colocation facilities across the globe.
Players are focusing on offering non-standard racks to pack more servers into data center real estate, improve airflow management and fit more cabling into cabinets.
The data center market is highly concentrated because the majority share is held by leading data center providers. The companies that hold market share of 10% to 12% are tier-1 companies and this group includes players like Cisco Systems, HPE, and Dell Technologies.
The companies with market share of above 7% and below 12% are the promising players. These companies are likely to showcase a quick growth trend and harness the opportunities that the global market has to offer to accommodate business expansion and revenue generation. This group includes NTT communications, Huawei Technologies, and Fujitsu.
Companies that holds a relatively lower share, worth less than 7% are strategizing to attract new clientele in foreign markets. Some of the companies in this group are Rackspace, Hitachi, and KDDI.
According to FMI, market players rely on multiple expansion strategies to deepen penetration across lucrative markets. These strategies include product launches, collaborations with key players, partnerships, acquisitions and strengthening of regional and global distribution networks.
In January 2020, NTT Communications has launched its new Global Data Centers division, which incorporates e-shelter, Gyron, Netmagic, NTT Indonesia Nexcenter, RagingWire and other data center companies that formerly sat under the NTT Communications brand.
In February 2020, Dell Technologies introduced its new data server solutions for helping customer analyze data at the edge, outside of traditional data center. The new offering includes new edge server designs.
Also, in June 2019, HPE entered into partnership agreement with Qumulo, a leader in hybrid cloud file storage, to encompass both on premise and hybrid based storage solutions.
FMI has profiled the following prominent data center providers in its report:
- IBM Corporation
- Cisco System, Inc.
- Dell Technologies
- Hitachi Ltd
- NTT Communications
- Schneider Electric
- Comarch SA
- Huawei Technologies Co., Ltd.
Data Center Market Report Scope
Historical Data Available for
US$ Mn for Value & Units for Volume
Key Regions Covered
North America, Europe, Middle East & Africa and Rest of the World
Key Countries Covered
U.S., Canada, Germany, Italy, France, U.K., Spain, GCC and South Africa
Key Segments Covered
Components, Data Center Sizes, Industry, and Region
Key Companies Profiled
Customization & Pricing
Key questions answered in the report
- How will data center market expand until 2031?
FMI projects the global data center market to register a CAGR worth 7.4% across the 2021-2031 assessment period. Increasing penetration of cloud services is anticipated to drive the growth in a positive direction.
- Which is the most lucrative market for data centers?
North America is the most lucrative market for data centers globally and it will remain dominant through 2031. Within North America, the U.S. will account for the lion’s share due to the presence of a large number of data centers in the country.
- Who are the leading players in data center market?
Prominent players operating in the global data center landscape include Dell Technologies, IBM Corporation, Cisco Systems, HPE, Dell Technologies among others
- Which Industry is Exhibiting High Demand for Data Centers?
IT & Telecom industry is expected to remain the dominant end user for the data centers market through the forecast period. However, application in the media & entertainment sector is expected to increase at a higher rate.
- Which Size of Data Center has been Registering High Demand?
Services by small data centers are expected to remain highly sought-after through 2021-2031.
Enquiry before Buying
- Is the data center market research conducted by FMI?
Yes, the data center report has been compiled by expert analysts of FMI through a combination of primary and secondary research. To know more about how the research was conducted, you can speak to the research analyst.
- What research methodology is followed by FMI?
FMI follows a methodology that encompasses the demand side assessment of the market, and triangulates the same through a supply side analysis. This methodology is based on use of standard market structure, methods and definitions.
- Who are the respondents for primary research?
FMI speaks to stakeholders across the spectrum, including C-level executives, distributors, product manufacturers, industry experts. For a full list of primary respondents, please reach out to us.
- What are the sources of secondary research?
FMI conducts extensive secondary research through proprietary databases, paid databases, and information available in the public domain. We refer to industry associations, company press releases, annual reports, investor presentations, and research papers. More information about desk research is available upon request.
- Is a sample of this report available for evaluation?
Yes, you can request a sample and it will be sent to you through an email.
- How can I buy this report?
FMI provides a secure online payment system to buy report seamlessly. You can buy the report securely and safely.
Key Segments Covered of the Data center Market
- Data Center Power Systems
- Data Center Racks
- Data Center Servers
- Data Center Networking Devices
- Professional Services
- Integration & Implementation
- Support & Maintenance
- Managed Services
- Professional Services
Data Center Size
- Small Data Center
- Mid-Sized Data Center
- Large Data Center
- IT & Telecom
- Media & Entertainment
- North America
- Latin America
- East Asia
- South Asia & Pacific
- Middle East & Africa (MEA)