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The retail colocation market size is forecast to increase by USD 45.86 billion at a CAGR of 18.5% between 2023 and 2028. The market is experiencing significant growth due to the rising demand for retail colocation facilities, which enable businesses to house their IT infrastructure in third-party data centers located near their end-users. This proximity reduces latency and improves application performance. Another trend driving the market is the growing adoption of software-defined data centers (SDDCs), which offer greater flexibility, agility, and cost savings. Additionally, the adoption of mini data centers is gaining traction, particularly among small and medium-sized businesses (SMBs), due to their cost-effectiveness and ease of deployment. These trends are expected to continue, fueling the growth of the retail colocation market in the coming years. The market report forecast market size, historical data spanning from 2018 - 2022, and future projections, all presented in terms of value in USD million for each of the mentioned segments.
Retail colocation refers to the rental of space and resources in a data center for housing and managing IT infrastructure, including computing resources and business applications, for retail businesses and IT startups. This approach allows organizations to leverage the benefits of wholesale colocation services without the need for building and maintaining their own data centers. Data centers offer advanced security measures, reliable connectivity, and uptime service-level agreements (SLAs) to ensure the availability of computer, IT infrastructure. Retail colocation in colocation data centers also enables businesses to access cloud services, global interconnection, and 5G technology for faster network connectivity. The increasing adoption of IoT, autonomous vehicles, advanced robotics, and data processing requires high-density processing and energy-efficient, green data center solutions. Colocation data centers provide intelligent power management and cooling solutions to support these demanding applications. Moreover, retail colocation offers flexible budgeting options and allows businesses to scale their IT infrastructure as needed.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD million " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The SMEs segment is estimated to witness significant growth during the forecast period. Retail colocation refers to the rental of space and resources in a data center for housing and managing IT infrastructure, including computing resources and data storage, for retail businesses. This approach allows businesses to leverage the benefits of wholesale colocation services, such as enhanced security, connectivity, and uptime service-level agreements (SLAs), while keeping their IT budgets in check. As the digital transformation continues, IT startups and established businesses alike are increasingly relying on data centers for their IT infrastructure needs. Advanced technologies like cloud computing, IoT, and edge computing are driving the demand for colocation data centers, which offer global interconnection, enabling seamless data transmission and integration with cloud services and business applications.
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The SMEs segment accounted for USD 9.44 billion in 2018. Security is a top priority for retail businesses, and colocation data centers provide advanced security measures, including data theft prevention and disaster recovery solutions. Managed services, cost-effective solutions, and energy-efficient designs are also key features of these facilities. The retail sector is witnessing significant changes, with the rise of e-trade sales and the integration of IoT, autonomous vehicles, advanced robotics, and other digital technologies. Network dynamics are becoming increasingly complex, requiring data centers to offer high-speed connectivity and flexible, scalable solutions. Integrated IDC services, including data processing and network connectivity, are essential for businesses to remain competitive and agile in today's market.
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North America is estimated to contribute 32% to the growth of the global market during the market forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market is witnessing significant growth due to the increasing adoption of 5G technology and the deployment of Cloud data centers. Digital Exchanges and High-capacity networks are enabling edge-computing applications, leading to cloud migration and the demand for shared facilities. Network security, redundant power supply, and reliable technologies are crucial considerations for businesses seeking colocation services. Tier 3 data centers in smart cities offer Security compliance and intelligent power management, cooling solutions, and IT infrastructure solutions, making them an attractive choice for industries such as healthcare, IT, and telecom. Cloud service providers are investing in smart homes, energy-efficient, high-density processing and cloud infrastructure. Scalable solutions, security measures, remote monitoring, big data analytics, and modular data centers are other trends shaping the market. The increasing Internet penetration and infrastructure investments are further fueling the growth of the Retail Colocation Market.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rising demand for retail colocation facilities is notably driving market growth. Retail colocation refers to the rental of computing resources, including servers, storage, and network equipment, from third-party data centers. This approach offers numerous benefits over building and maintaining an in-house data center, particularly for small and medium-sized enterprises (SMEs). By opting for colocation, businesses can significantly reduce their capital expenditures on IT infrastructure while improving their connectivity for operational services. Moreover, colocation facilities provide advanced security features, software-defined storage, software-defined computing, uptime service-level agreements (SLAs), and global interconnection capabilities, enabling seamless data transmission and data theft prevention. The retail colocation market is experiencing exponential growth due to the increasing adoption of cloud technologies, IoT, and edge computing. Cloud deployment, business applications, and IT infrastructure are increasingly being moved to colocation data centers.
Further, these facilities offer cost-effective and energy-efficient solutions, making them an attractive alternative for start-ups and IT ecosystems. Furthermore, colocation data centers provide disaster recovery and managed services, ensuring business continuity and operational excellence. As the digital transformation gathers momentum, industries such as e-trade, autonomous vehicles, and advanced robotics are increasingly relying on colocation to process data and ensure network connectivity. With the integration of IDC services, colocation offers a comprehensive solution for businesses looking to optimize their operational expenditure and adapt to the dynamic network landscape. Thus, such factors are driving the growth of the market during the forecast period.
The growing adoption of software-defined data centers is the key trend in the market. Retail colocation, a segment of the data center market, offers IT startups cost-effective solutions for housing their IT infrastructure. This includes computing resources and connectivity to support business applications and cloud services. Wholesale colocation data centers provide the necessary space, power, and cooling for large-scale IT deployments. With the increasing adoption of cloud technologies and IoT, the need for reliable and secure colocation facilities is on the rise. Software-defined data centers (SDDC) have emerged as a more efficient alternative to traditional data centers. SDDCs utilize intelligent software systems to manage hardware infrastructure, enabling the delivery of both legacy applications and cloud computing services. This results in improved efficiency, reduced operational expenditure, and faster application deployment.
Moreover, SDDCs offer higher availability and better security through uptime service-level agreements (SLAs) and advanced security features. Global interconnection and network dynamics are crucial considerations for businesses, and colocation data centers provide the necessary network connectivity and data transmission capabilities. In today's digital transformation era, businesses require integrated IDC services to manage data storage, data theft prevention, and disaster recovery. Managed services, smart grids, energy-efficient solutions, and cost-effective options are essential for the start-up ecosystem. CyrusOne, a leading colocation provider, offers a range of colocation solutions tailored to meet the unique needs of businesses, from e-trade sales to edge computing and cloud deployment. As the use of cloud computing, autonomous vehicles, and advanced robotics continues to grow, the demand for reliable and secure colocation facilities will only increase. Network connectivity and data processing capabilities will be essential for businesses to remain competitive and agile in the market. Thus, such trends will shape the growth of the market during the forecast period.
The adoption of mini data centers is the major challenge that affects the growth of the market. The retail colocation market is experiencing significant growth, driven by the increasing demand for cost-effective and efficient IT infrastructure solutions among IT startups and SMEs. Retail colocation refers to the leasing of space and power in a third-party data center for housing IT equipment, as an alternative to building and maintaining an in-house data center. Mini data centers, which can accommodate up to 40 racks and hyperscale, are gaining popularity due to their ability to reduce infrastructure spending and offer efficient management of edge computing facilities. Edge computing, facilitated by cloud technologies and IoT, requires reliable and secure connectivity and computing resources. Colocation data centers provide an ideal solution, offering high uptime through service-level agreements (SLAs), advanced security features, and global interconnection. These facilities enable businesses to deploy their applications and IT infrastructure closer to their end-users, reducing latency and network dynamics.
Moreover, the integration of IDC services, such as data storage, transmission, and disaster recovery, further enhances the value proposition of colocation data centers. The operational expenditure model of colocation offers cost-effective solutions for businesses, while energy-efficient designs cater to the growing concern for sustainability. The start-up ecosystem, including advanced robotics, battery, autonomous vehicles, and e-trade sales, is driving the digital transformation, further fueling the demand for colocation services. Hence, the above factors will impede the growth of the market during the forecast period.
The market forecasting 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 market growth analysis strategies.
Customer Landscape
Companies 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.
AT and T Inc. - The company offers retail colocation services and solutions to support network and technology landscape through design and implementation approach.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies 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 companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
Retail colocation refers to the deployment of IT infrastructure in a third-party data center, where businesses can lease computing resources, data storage, and network connectivity on a pay-as-you-go basis. This model is increasingly popular among IT startups due to its cost-effective and energy-efficient solutions. Retail colocation differs from wholesale colocation in that it offers smaller, customizable spaces and allows for greater flexibility in terms of IT infrastructure deployment. Data centers provide essential services such as security, uptime SLAs, and disaster recovery. With the rise of cloud technologies and IoT, retail colocation has become a crucial component of digital transformation for businesses. The retail colocation market is driven by the need for advanced computing resources, network dynamics, and data storage, as well as the integration of IDC services, data transmission, and data theft prevention. The market is also influenced by the global interconnection of businesses, enabling e-trade sales and the deployment of cloud services. The integration of cloud deployment, IT infrastructure, and managed services is further driving the market, with the adoption of cloud computing, autonomous vehicles, and advanced robotics leading to increased data processing and network connectivity demands.
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Market Scope |
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Report Coverage |
Details |
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Page number |
165 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 18.5% |
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Market growth 2024-2028 |
USD 45.86 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
15.2 |
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Regional analysis |
North America, APAC, Europe, Middle East and Africa, and South America |
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Performing market contribution |
North America at 32% |
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Key countries |
US, Canada, UK, China, and Germany |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
AT and T Inc., China Telecom Corp. Ltd., China Unicom Hong Kong Ltd., Cogent Communications Holdings Inc., CoreSite Realty Corp., CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., Equinix Inc., Global Switch Ltd., Internap Holding LLC, KDDI Corp., Nippon Telegraph and Telephone Corp., phoenixNAP LLC, Rahi, Terago Inc., Verizon, VNET Group Inc., and Yotta Data Services Pvt. Ltd. |
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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 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 End-user
7 Market Segmentation by Industry Application
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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