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The data center market size is estimated to grow at a CAGR of 12.73% between 2022 and 2027. The market size is forecast to increase by USD 329.82 billion. The growth of the market depends on several factors, including the rise in the adoption of multi-cloud and network upgrades to support 5G, the demand planning and expansion by hyper scalers, and the growing demand among SMEs.Data centers are centralized facilities for computing, processing, and storage. They include high-performance servers, networking equipment, storage arrays, and supporting services such as powering and cooling solutions. Data centers are established by either large-scale enterprises or enterprises offering cloud-based services. Vendors in the market-built collocation and managed to host data center facilities and rent them to other large and small- and medium-sized enterprises (SMEs).
This data center market report extensively covers market segmentation by component (IT infrastructure, power management, mechanical construction, general construction, and security solutions), end-user (BFSI, energy, IT, and others), and geography (North America, APAC, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The rise in the adoption of multi-cloud and network upgrades to support 5Gs is notably driving the market growth, although factors such as increasing power consumption may impede the market growth. Our researchers analyzed the data with 2022 as the base year and the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rise in the adoption of multi-cloud and network upgrades to support 5Gs is notably driving the market growth. Data centers are highly capital-intensive business facilities, with investments upward of a billion. the stakeholders in the data center used to the building and construction industry face immense pressure to adhere to timelines and start operations as soon as possible. At this time market and costs per megawatt are the key indicators considered for a data center facility's design and construction process. Meeting contractual schedules and performance requirements are major challenges for the growth of the global data center market. The delay in developing a data center generally occurs due to government inactions, public opposition, inability to obtain financing, weather conditions, industrial accidents, and labor disruptions.
Moreover, the global data center market has witnessed unprecedented demand in 2021-2022 as enterprises increase investments to upgrade IT infrastructure and shift toward cloud services. Enterprises purchase server configurations supporting big data analytics, AI, and software-defined infrastructure. However, a shortage in the supply of server components from the supplier side renders it difficult for vendors to meet the demand. The shortage of server components also created an issue in lead times (the period between server order booking and server delivery) for some of the server vendor's channel partners (from 30 days to 3 months). Such issues can delay the launch of servers in the market, resulting in data center operators incurring additional costs, which may hamper the growth of the global data center market during the forecast period.
Increased adoption of HPC across enterprises is a key trend in the market. HPC is a combination of processes for delivering higher and more efficient performance in computing. Usually, HPC systems are a cluster of processors with 16-64 nodes. They use algorithms, networks, and simulated computer environments, ranging from small cluster computers to large supercomputers. HPC systems are primarily used for scientific and engineering applications. They have a high level of computing performance compared with general-purpose computers. The performance of HPC systems is measured in floating-point operations per second (FLOPS) instead of million instructions (MIPS). HPC systems aid in solving recurring problems and complex operations much faster and more efficiently for applications such as physical simulations, weather forecasting, quantum mechanics, and molecular modeling.
In addition, the increasing need to establish product innovation and economic competitiveness drives the demand for HPC. HPC systems are mainly used by aerospace and defense companies, governments, laboratories, and research centers. Help these firms require these systems to solve highly complex tasks, such as simulating air effects on plane wings and determining weather conditions. Cloud-based HPC systems are likely to minimize the expenditure of SMEs as they require low initial investments for infrastructure construction and hardware implementation. The following are some examples of investments in HPC in the market.
HPC systems incorporate tens of thousands of processors that can perform billions and trillions of computations or calculations per second. To perform these calculations efficiently, HPC systems need highly configured servers and data centers that can handle compute-intensive workloads. The rising use of HPC systems will continue to increase the demand for high-performance data centers, These factors impact the growth of the global data center market during the forecast period.
Increasing power consumption is a challenge to market growth. Due to a rise in internet penetration, the growing use of social networking sites, the improvement of automation technologies, smart city initiatives, and the implementation of AI across industries are driving investments in data centers. Globally, data centers will account for nearly 4% of the world's electricity consumption in 2022. This number is expected to double by the end of the forecast period. In a data center, servers and cooling solutions account for a major share of electricity consumption.
Moreover, most developed nations, such as the US, the UK, Japan, and emerging countries, observe significant power production and consumption gaps. Large-sized data centers are used by multiple enterprises, and millions of users need to be powered continuously to ensure business continuity. The construction of data centers globally is increasing yearly, which raises the risk of power shortage during the forecast period. Vendors are also moving toward modernizing data centers. The installation of intelligent infrastructure systems, such as automation software, DCIM solutions, and energy-efficient power equipment, will gain popularity in data centers during the forecast period. Moreover, enterprises are slowly moving toward energy-efficient infrastructure models for the construction of data centers. This shift toward greener energy sources and the focus on reducing carbon emissions can hinder market growth during the forecast period.
The market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Data Center Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Amazon.com Inc.: The company offers data center solutions such as AWS data center.
The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the IT infrastructure segment will be significant during the forecast period. IT infrastructure segment includes server infrastructure, storage infrastructure, software-defined-data center network infrastructure, converged infrastructure, backup and recovery software, automation software, and data center infrastructure management (DCIM) solutions. The use of demand for computing power and storage to support the growth in data traffic. Enterprises globally have embraced cloud technologies and are moving their data from on-premises data centers to cloud-based data centers. This trend is expected to continue during the forecast period to create demand for servers, storage infrastructure, and other IT equipment.
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The IT Infrastructure segment was valued at a market share of USD 171.96 billion in 2017 and continue to grow until 2021. The major reason for the growth of these segments is the rise in investments in hyperscale data centers (HDCs). During the past few years, hyper scalers have invested nearly USD200 billion in capacity expansion and opening new data centers. They also provide storage for the data and computing speed. The increase in the number of HDCs is estimated to create demand for data center IT infrastructure and other related infrastructure across the world these are the factors in turn will help in the growth of the global data center market during the forecast period.
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North America is estimated to contribute 36% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. In this region, enterprises are increasingly adopting cloud solutions from hyper-scale providers such as AWS, Microsoft, and Oracle to meet computing capacity requirements with minimum expenditure. Also, the region has several data centers already established by enterprises. For instance, Apple Inc. (Apple) has all 11 data centers, of which six are located in this region.
Moreover, real-estate enterprises are supporting the growth of the data center market in North America. and the US, also followed by countries such as Canada, has been at the forefront of driving the adoption of new technologies, and this trend is expected to continue during the forecast period. It is also likely to drive the data center market in North America.
The outbreak of the COVID-19 pandemic in the growth of the market in North America. Moreover, the shift towards remote work and online learning due to COVID-19 has led to a surge in demand for cloud-based services, including cloud storage, collaboration tools, and video conferencing. This has resulted in increased demand for data centers to support these services. Many major vendors are investing in expanding their business. In April 2022, Google announced an investment of USD 9.5 billion in U.S. data centers and offices to expand its footprint, mainly focused on the southern and Western regions of the country. Such factors that are initiatives by the key market players will substantially drive the growth of the regional data center market during the forecast period.
The data center market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
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Data Center Market Scope |
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Report Coverage |
Details |
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Page number |
193 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 12.73% |
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Market growth 2023-2027 |
USD 329.82 billion |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
11.58 |
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Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
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Performing market contribution |
North America at 36% |
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Key countries |
US, Canada, China, Germany, and UK |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Alphabet Inc., Amazon.com Inc., Apple Inc., Cisco Systems Inc., CyrusOne LLC, Digital Realty Trust Inc., Equinix Inc., Hewlett Packard Enterprise Co., Intel Corp., International Business Machines Corp., Microsoft Corp., Nippon Telegraph and Telephone Corp., Oracle Corp., Salesforce Inc., SAP SE, Verizon Communications Inc., 365 Data Centers, China Telecom Corp. Ltd., Cyxtera Technologies Inc., and KDDI Corp. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Component
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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