Retail Colocation Market Analysis North America, APAC, Europe, Middle East and Africa, South America - US, Canada, UK, China, Germany - Size and Forecast 2024-2028

Retail Colocation Market Size 2024-2028

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 increasing demand for retail colocation facilities. This trend is driven by the rising adoption of software-defined data centers and the deployment of mini data centers to support the growing digital transformation in various industries.
• Retailers are recognizing the benefits of colocating their managed IT infrastructure in third-party data centers, which provides them with cost savings, improved operational efficiency, and enhanced security. Additionally, the use of edge computing and the increasing importance of data privacy are also fueling the growth of the market. Overall, these factors are expected to continue driving market growth In the coming years.

What will be the Size of the Retail Colocation Market During the Forecast Period?

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• The market refers to the provision of data center space and computing resources to businesses and IT startups, allowing them to house and manage their own servers and IT infrastructure alongside those of other organizations. This model contrasts with wholesale colocation, where an entire data center is leased out to a single tenant.
• Retail colocation enables businesses to reduce capital expenditures on building and maintaining their own data centers, while benefiting from enhanced security, reliable connectivity, and uptime service-level agreements (SLAs). Key trends In the market include the increasing adoption of cloud services, the proliferation of the Internet of Things (IoT) and advanced technologies such as autonomous vehicles and 5G technology, and the growing demand for energy-efficient, high-density processing and green data center solutions.
• Retail colocation data centers offer global interconnection and advanced cooling solutions, ensuring optimal performance and reliability for business applications and IT infrastructure. With a focus on intelligent power management and 24/7 support, these facilities enable businesses to effectively manage their colocation budget while maintaining the highest levels of network connectivity and SLAs.

How is this Retail Colocation Industry segmented and which is the largest segment?

The retail colocation industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.

• End-user
  • SMEs
  • Large enterprises
• Industry Application
  • IT and telecom
  • Healthcare
  • Retail and e-commerce
  • Energy and utility
  • Others
• Geography
  • North America
    • Canada
    • US
  • APAC
    • China
  • Europe
    • Germany
    • UK
  • Middle East and Africa
  • South America

By End-user Insights

• The smes segment is estimated to witness significant growth during the forecast period.

Retail colocation services in small and medium-sized data centers have gained significant traction due to their reliability and flexibility. Unlike large data centers, which rely on extensive redundant configurations, small and medium-sized data centers prioritize device reliability. This demand for dependable infrastructure necessitates continuous upgrades and advancements, driving the need for retail colocation services. These services enable small and medium-sized data centers to improve operational efficiency, enhance productivity, and ensure energy savings through redundancy and flexibility. Additionally, retail colocation provides access to advanced computing resources, cloud technologies, and IoT integration, making it an essential component of digital transformation for businesses.

Security, connectivity, and uptime service-level agreements (SLAs) are crucial considerations for retail colocation, ensuring data protection and seamless network operations. Global interconnection and edge computing applications further expand the reach and capabilities of small and medium-sized data centers. Cost-effective and energy-efficient solutions are also essential for start-ups and IT ecosystems, making retail colocation an attractive option for businesses seeking scalable and reliable IT infrastructure solutions.

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The SMEs segment was valued at USD 9.44 billion in 2018 and showed a gradual increase during the forecast period.

Regional Analysis

• North America is estimated to contribute 32% 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.

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The market is experiencing substantial growth In the region due to increasing investments from hyperscale cloud providers, colocation service providers, and enterprises in upgrading their IT infrastructure. This upgrade supports emerging technologies such as edge computing, 5G, multi-cloud services, big data analytics, and IoT. The escalating demand for IoT devices is a significant driver for market expansion. Additionally, the need for cost-effective, energy-efficient, and scalable solutions, along with reliable technologies and advanced security measures, is fueling market growth. Colocation budgets are also a crucial factor as businesses seek to minimize operational expenditure and optimize network dynamics. Global interconnection, data storage, integrated IDC services, and data transmission are essential components of the market, ensuring uptime through service-level agreements (SLAs) and data theft prevention. Cloud deployment, managed services, and disaster recovery solutions further enhance the market's value proposition.

Market Dynamics

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.

What are the key market drivers leading to the rise In the adoption of Retail Colocation Industry?

Rising demand for retail colocation facilities is the key driver of the market.

• Colocation, a service that enables businesses to rent computing resources from third-party data centers, offers several advantages over building and maintaining an in-house data center. One such offering is retail colocation, which provides enterprises with the opportunity to rent servers, storage, and network equipment in a shared facility. This model significantly reduces capital expenditures on infrastructure and enhances connectivity for operational services. The number of colocation data centers is expanding at an impressive rate, catering to the growing demands of businesses, particularly IT startups. These facilities provide enterprises with access to advanced technologies such as cloud computing, IoT, and edge computing.
• Security, uptime service-level agreements (SLAs), and global interconnection are essential considerations for businesses when choosing a colocation provider. Colocation facilities offer reliable technologies, including redundant power supplies, cooling solutions, and intelligent power management. Additionally, they provide network security, remote monitoring, and big data analytics services. Scalable solutions and modular data centers enable businesses to expand their IT infrastructure as needed. E-trade sales, digital transformation, and disaster recovery are some applications of colocation services. Energy-efficient solutions and cost-effective pricing are also essential factors for businesses seeking colocation services. The integration of IDC services, such as data transmission and data storage, further enhances the value proposition of colocation facilities.
• The adoption of cloud technologies, 5G technology, and high-capacity networks is driving the growth of colocation data centers. Edge-computing applications, cloud migration, and disaster recovery are some of the primary use cases for colocation services. The market for colocation services is expected to continue growing, offering businesses cost-effective, energy-efficient, and reliable IT infrastructure solutions.

What are the market trends shaping the Retail Colocation Industry?

Growing adoption of software-defined data centers is the upcoming market trend.

• Retail colocation, a segment of the larger data center market, enables IT startups and businesses to rent space and resources for their IT infrastructure in a shared facility. Wholesale colocation, another variant, offers larger spaces for cloud service providers. Both types provide access to advanced computing resources, cloud technologies, and IoT technologies, fostering digital transformation and enabling e-trade sales. Security, connectivity, and uptime service-level agreements (SLAs) are crucial considerations for retail colocation. Global interconnection hubs facilitate high-capacity networks, edge-computing applications, and 5G technology. Colocation data centers offer integrated IDC services, ensuring data transmission and data theft prevention. Operational expenditure and network dynamics are essential factors driving the market's growth.
• Energy-efficient solutions, such as intelligent power management and cooling solutions, contribute to cost-effective and reliable technologies. Scalable solutions, managed services, and disaster recovery services cater to diverse business needs. Cloud deployment, IT infrastructure, business applications, and cloud services are increasingly utilizing colocation data centers. Healthcare, IT and telecom, and various industries benefit from colocation services' advantages. Security measures, remote monitoring, and big data analytics further enhance the market's appeal. Modular data centers and green data centers are gaining popularity due to their energy efficiency and high-density processing capabilities. Internet penetration and infrastructure investments continue to fuel the market's expansion.

What challenges does the Retail Colocation Industry face during its growth?

Adoption of mini data centers is a key challenge affecting the industry growth.

• The market is experiencing significant growth, driven by several key factors. One major reason is the increasing need for cost-effective IT infrastructure solutions among businesses, particularly SMEs. Mini data centers, which offer efficient management of edge computing facilities, are gaining popularity due to their ability to reduce infrastructure spending and improve network connectivity. These self-contained systems, ranging from a single to up to 40 racks, are ideal for colocation data center providers looking to offer global services. Another factor fueling the market's growth is the digital transformation trend, which is driving the adoption of cloud technologies, IoT, and advanced robotics.
• These technologies require high-capacity networks and computing resources, which are best provided through colocation data centers. Moreover, the need for reliable uptime service-level agreements (SLAs), security, and disaster recovery solutions is increasing, making colocation an attractive option for businesses. Furthermore, the increasing importance of security compliance and network security In the age of data theft prevention and e-trade sales is driving the demand for integrated IDC services. Energy-efficient solutions, such as intelligent power management and cooling solutions, are also becoming essential, as businesses look to minimize their operational expenditure and reduce their carbon footprint. The market's growth is also being driven by the proliferation of 5G technology, which is expected to enable edge-computing applications and cloud migration.
• Modular data centers and QTS Realty Trust's colocation services are among the scalable solutions that are gaining traction In the market. Remote monitoring and big data analytics are also becoming essential components of colocation services, as businesses look to optimize their IT infrastructure and improve their network dynamics. In conclusion, the market is expected to grow at a CAGR of over 15% during the forecast period, driven by the need for cost-effective solutions, digital transformation, and the increasing importance of security and energy efficiency. Colocation data centers offer businesses the benefits of scalable solutions, reliable technologies, and global interconnection, making them an attractive option for businesses looking to optimize their IT infrastructure and improve their network connectivity.

Exclusive Customer Landscape

The retail colocation 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 retail colocation market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

Customer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, retail colocation market forecast, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence In the industry.

The industry research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• 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.
• Yotta Data Services Pvt. Ltd.

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 industry 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.

Research Analyst Overview

Retail colocation and wholesale colocation have emerged as significant solutions In the dynamic data center landscape, providing businesses with flexible, cost-effective alternatives to traditional IT infrastructure. These solutions enable organizations to lease computing resources from third-party data centers, sharing facilities with other tenants while maintaining control over their IT infrastructure. Colocation offers numerous benefits, including enhanced security, improved connectivity, and increased uptime through Service-Level Agreements (SLAs). The market caters to small and medium-sized businesses, while wholesale colocation is geared towards larger enterprises with significant IT requirements. The integration of advanced technologies, such as cloud technologies and IoT, has significantly influenced the data center industry.

Colocation data centers have become essential components of digital transformation strategies, enabling businesses to deploy cloud services, support business applications, and ensure reliable IT infrastructure. Network dynamics play a crucial role In the success of colocation services. High-capacity networks and global interconnection hubs provide tenants with seamless connectivity, enabling them to access a wide range of cloud services and applications. Security is a primary concern for businesses In the digital age. Colocation providers offer robust security measures, including data theft prevention, network security, and security compliance, ensuring tenants' data remains protected. Cost-effective solutions are a significant driver for the adoption of colocation services.

Operational expenditure (Opex) is a more attractive option for businesses compared to the capital expenditure (Capex) required for building and maintaining their own data centers. Energy-efficient solutions are increasingly important In the data center industry. Colocation providers invest in reliable technologies, such as intelligent power management and cooling solutions, to minimize energy consumption and reduce environmental impact. The start-up ecosystem has also been influenced by the growth of the colocation market. IT infrastructure solutions, such as modular data centers and remote monitoring, enable start-ups to deploy their IT infrastructure quickly and cost-effectively. The data center landscape is continuously evolving, with emerging technologies such as edge computing, disaster recovery, and managed services shaping the future of the industry.

Colocation providers must adapt to these trends to remain competitive and meet the evolving needs of their tenants. In conclusion, the market offers businesses flexible, cost-effective, and secure IT infrastructure solutions. The integration of advanced technologies, focus on energy efficiency, and robust security measures make colocation an attractive option for businesses undergoing digital transformation. The industry continues to evolve, with emerging trends shaping the future of colocation services.

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What are the Key Data Covered in this Retail Colocation Market Research and Growth Report?

• CAGR of the Retail Colocation industry during the forecast period
• Detailed information on factors that will drive the growth and forecasting between 2024 and 2028
• Precise estimation of the size of the market and its contribution of the industry in focus to the parent market
• Accurate predictions about upcoming growth and trends and changes in consumer behaviour
• Growth of the market across North America, APAC, Europe, Middle East and Africa, and South America
• Thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the retail colocation market growth of industry companies

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