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The US retail colocation market size is forecast to increase by USD 5.44 billion at a CAGR of 17.03% between 2023 and 2028. The market is experiencing significant growth due to the increasing need for high-quality data transmission services in the retail sector. Professional data center colocation providers are offering flexible response solutions to meet the business operational requirements of retailers. Global customization and safety modules are key features that attract retailers to opt for data center colocation services. The integration of cloud and IoT technologies is also driving the market, enabling retailers to manage their data more efficiently and securely. The adoption of software-defined data centers and mini-data centers is further fueling market growth. Retailers are looking for cost-effective solutions to manage their retail infrastructure, leading to a shift towards capital and operational expenditure models.
The retail colocation market is a significant segment of the broader colocation industry. Retail colocation refers to the leasing of space and power from third-party data center providers to house and operate IT equipment. This model is increasingly popular among businesses seeking high-performance, flexible, and cost-effective solutions for their IT infrastructure. Wholesale colocation, a related concept, involves leasing large data center spaces to multiple tenants. Retail colocation, on the other hand, caters to individual business needs with customized solutions. Cogent Communications, CoreSite Realty, and Global Switch are prominent retail colocation providers in the US.
Interconnection is a crucial aspect of retail colocation. It enables businesses to connect with various networks, service providers, and partners, enhancing their reach and functionality. Edge computing, another related trend, brings computing power closer to the end-users, improving latency and performance. Disaster recovery is another key application of retail colocation. By housing critical IT infrastructure in secure data centers, businesses can ensure business continuity in the event of disasters or outages. Retailers, e-trade sales, software companies, and system integrators are among the primary users of retail colocation services. Migration to retail colocation is a popular choice for businesses seeking to optimize resource utilization.
Hybrid cloud infrastructure, which combines on-premises and cloud-based resources, is a common deployment model. Virtualization technologies, such as containerization and server virtualization, further enhance resource utilization and flexibility. Data storage is a significant component of retail colocation. Colocation cabinets and colocation cages provide secure and customizable space for businesses to store their data. High-speed connectivity and strong security measures ensure data protection and accessibility. In conclusion, the retail colocation market offers businesses a flexible, cost-effective, and high-performance alternative to traditional on-premises IT infrastructure. With interconnection, edge computing, disaster recovery, and hybrid cloud infrastructure, retail colocation caters to various business needs and applications. By leveraging these solutions, businesses can optimize resource utilization, improve performance, and ensure business continuity.
The market 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.
The SMEs segment is estimated to witness significant growth during the forecast period. In the US market, retail colocation services have gained significant traction among small and medium-sized businesses due to their higher uptime reliability compared to large data centers. These businesses prioritize reliability as their primary power needs are directly linked to their retail operations. Colocation providers catering to this segment offer customized solutions to meet specific power requirements, ensuring minimal downtime. The wholesale category in the colocation market is witnessing an influx of emerging companies, leading to increased competition among colocation providers. To meet the growing demand, these providers are continually upgrading their technology stacks to offer more advanced colocation services.
The migration towards hybrid cloud solutions is also fueling the need for retail colocation services, as businesses seek to maintain on-premises infrastructure while leveraging cloud benefits. Retail colocation services enable businesses to improve operational efficiency and productivity while enhancing energy efficiencies, redundancy, and flexibility. Colocation providers are responding to this demand by offering customized, cost-effective, and flexible colocation services that cater to the unique power requirements of retail customers. The future of retail colocation lies in providing advanced technology solutions, ensuring high uptime reliability, and maintaining energy efficiency.
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The SMEs segment accounted for USD 1.21 billion in 2018 and showed a gradual increase during the forecast period.
Our market 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.
Rising demand for retail colocation facilities is the key driver of the market. In the US market, retail colocation has emerged as a cost-effective alternative to building and maintaining an in-house data center for businesses. By renting computing servers, storage, and network equipment from a colocation facility, enterprises can significantly reduce their capital expenditures on infrastructure and enhance their connectivity for operational services. Retail colocation facilities provide private racks that businesses can lease to house their IT infrastructure. This setup is particularly beneficial for small and medium-sized enterprises (SMEs), enabling them to access modern infrastructure at affordable subscription costs. The retail colocation market is witnessing substantial growth, with an increasing number of businesses opting for this solution.
Additionally, while some enterprises continue to build and manage their own cloud platforms, others prefer the managed services model to host their platforms in retail colocation facilities. Cogent Communications, CoreSite Realty, and Global Switch are some of the leading retail colocation providers in the US. Edge computing and interconnection are key trends driving the retail colocation market's growth. Edge computing allows businesses to process data closer to the source, reducing latency and improving response times. Interconnection facilitates seamless data exchange between different networks and systems, enhancing operational efficiency. Additionally, retail colocation facilities offer disaster recovery solutions and serve as a start-up platform for software companies, system integrators, and e-trade sales businesses.
The growing adoption of software-defined data centers is the upcoming trend in the market. In today's business landscape, the demand for high-quality data transmission services is at an all-time high. Retailers, in particular, require reliable and flexible data center solutions to support their growing operational needs. One such solution is data center colocation, where businesses rent space and resources in a professional IDC to house their IT infrastructure. Competitors in the retail colocation market offer global customization, enabling businesses to tailor their services to their specific requirements. These providers deliver flexible response capabilities, ensuring business continuity and disaster recovery. Safety modules are integrated into the data centers to prevent data theft scenarios, providing peace of mind for retailers.
Further, software-defined data centers are becoming increasingly popular due to their ability to support both legacy applications and cloud computing services. These data centers offer improved efficiency, lower costs, quicker application deployment, higher availability, and better security. With the growing importance of data security, software-defined data centers deliver workloads on the cloud while ensuring optimal security measures. As retailers add more racks and servers to their data center environments, managing all the servers from a single control plane is becoming essential. Colocation providers offer a centralized management system, making it easier for retailers to manage their IT infrastructure and focus on their core business operations.
The adoption of mini data centers is a key challenge affecting the market growth. Mini data centers, comprised of containment systems holding from one to approximately 40 racks, have gained significant traction in the US market. The primary drivers fueling this growth include the necessity to decrease infrastructure expenditures, the expansion of small and medium enterprises (SMEs), and the efficient management of edge computing facilities. Edge computing facilities serve as an intermediary between central mega data centers and end-users, thereby alleviating network congestion and latency issues. A primary hurdle in establishing large-scale colocation data centers lies in their substantial capital expenditures (CAPEX), which mini data centers help mitigate. Integrating power, cooling, and IT infrastructure within these compact systems minimizes overall spending while still offering colocation capabilities, computing support, hardware facilities, and application services with an assured uptime service-level.
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.
China Telecom Corp. Ltd.: The company offers colocation services through their China Telecom Americas extensive data center network.
The market research and growth report 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 practice of renting space and resources in a third-party data center for retailers and businesses to house their IT infrastructure. This approach offers several advantages over traditional on-premises solutions, including high-quality services, global customization, flexible response, and uptime reliability. Wholesale colocation, on the other hand, is a larger-scale version of colocation, catering to the needs of multiple businesses. Cogent Communications, CoreSite Realty, and Global Switch are among the leading colocation providers offering retail and wholesale colocation services. Interconnection, edge computing, disaster recovery, and start-up platforms are some of the key applications of retail colocation. Retailers, e-trade sales, software companies, system integrators, media and entertainment, and technology sectors are the primary consumers of these services. Colocation capabilities include infrastructure, computing support, hardware facilities, application services, data transmission, and power requirements.
Additionally, safety modules, data theft scenarios, cloud and IoT, business operational efficiency, capital & operational expenditure, and retail infrastructure are essential considerations for retailers. Colocation services enable businesses to migrate to hybrid cloud, virtualization technologies, and hybrid & multi-cloud strategies. Seamless cloud integration, managed services, and major cloud regions are crucial factors for retailers looking to optimize their IT infrastructure. Energy consumption, uptime reliability, and power needs are significant concerns for retailers in the retail segment. Sustainable, energy-efficient solutions, renewable energy, and cooling systems are essential to minimize carbon footprints and ensure sustainable data. Location restraints, space availability, proximity to clients, power infrastructure, and geographic risks are critical factors in choosing a colocation provider. Modular data centers, edge data centers, and data center clusters offer resource utilization and low-latency connections for retailers.
Further, colocation providers offer professional IDC services, ensuring high-speed connectivity, security measures, and multiple cloud support. Virtualization, hybrid cloud infrastructure, and facilities are essential components of a comprehensive technology stack. Major players in the retail colocation market offer a range of services, from colocation cabinets and cages to managed services and disaster recovery solutions. Colocation services are an essential component of a retailer's IT strategy, enabling them to optimize their technology stack and reduce costs while ensuring uptime reliability and security.
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Market Scope |
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Report Coverage |
Details |
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Page number |
143 |
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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 17.03% |
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Market Growth 2024-2028 |
USD 5.44 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
16.28 |
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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., Internap Holding LLC, KDDI Corp., Nippon Telegraph and Telephone Corp., phoenix NAP LLC, Rahi, TeraGo Inc., Verizon Communications Inc., and VNET Group Inc. |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles,market forecast , 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 market 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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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
We can help! Our analysts can customize this market research report to meet your requirements Get in touch
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 Market Segmentation by Deployment
9 Customer 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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