Western Europe Data Center Colocation Market by Type, End-user, and Geography - Forecast and Analysis 2023-2027

Western Europe Data Center Colocation Market Analysis Report 2023-2027:

The Western Europe data center colocation market is estimated to grow at a CAGR of 13.64% between 2022 and 2027. The market size is forecast to increase by USD 7,000.49 million. The growth of the market depends on several factors, including the rising demand for data center colocation facilities, an increase in business operational needs, and the growing number of mergers and acquisitions (M&A).

This data center colocation market report extensively covers market segmentation by Type (retail colocation and wholesale colocation), End-user (small, medium-sized enterprises, and large enterprises), and Geography (UK, Germany, France, the Netherlands, and Rest of Western Europe). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

What will be the Size of the Western Europe Data Center Colocation Market During the Forecast Period?

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Western Europe Data Center Colocation Market: Key Drivers, Trends, Challenges, and Customer Landscape

The rising demand for data center colocation facilities is notably driving market growth, although factors such as the focus on data center consolidation may impede market growth. Our researchers analyzed the data with 2022 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.

Key Data Center Colocation Market Driver in Western Europe

The rising demand for data center colocation facilities is notably driving market growth. An enterprise operating a colocation facility offers more benefits compared to an enterprise building its own data center. Collocation significantly reduces the CAPEX on infrastructure and improves the connectivity required for operational services. The number of these facilities is rapidly growing year-over-year. Many enterprises build and operate their own cloud platforms. They also host these platforms using the managed services model. These enterprises can streamline the operations of their IT infrastructure to achieve better uptime and availability of resources. With the increase in the online presence of enterprises across different industry verticals, the adoption of managed hosting services will rise during the forecast period. Managed hosting service providers such as Rackspace are expanding their footprint worldwide, which is expected to continue during the forecast period. Local colocation and managed-to-host service providers help consumers get data center colocation facilities at affordable rates, which has led investors to invest in the data center colocation market in Western Europe, leading to the growth of the market during the forecast period.

Significant Data Center Colocation Market Trends in Western Europe

Innovative approaches like submarine data centers is a key trend shaping market growth. Traditional data centers generate a lot of heat. Many service providers are trying to change the location of data centers to cooler countries to reduce the costs incurred on power and cooling systems. Cooling systems account for 30%-40% of the power consumed by data centers. Free cooling and liquid immersion cooling techniques are implemented by data center facilities to reduce power consumption. Many innovations are implemented by data center service providers to improve the efficiency of a facility. One such innovation is the submarine data center. 

Microsoft offers a submarine data center and operates it several feet below sea level off the coast of Orkney, which is a group of islands in Scotland. This submarine data center consists of multiple racks of computers with a large number of servers. The data center can hold data and process information for up to five years without the need for maintenance. This submarine data center would help improve Internet speeds in areas that lack the required infrastructure and enable easy cooling with less investment in cooling devices and racks. Such innovative approaches will help reduce power consumption in data centers. SMEs and large enterprises will prefer submarine data centers, which help enterprises improve Internet speeds in areas that lack the required infrastructure. Therefore, submarine data centers may hinder the growth of the data center colocation market in Western Europe during the forecast period.

Major Data Center Colocation Market Challenge in Western Europe

The focus on data center consolidation may impede the market growth. Many enterprises are focusing on reducing the size of data center facilities. Infrastructure-as-a-service (IaaS) is an important concept in which several companies utilize a consolidated data center. The significant adoption of IaaS has led to data center consolidation. The major reason for data center consolidation is to reduce operating costs. Several software companies are moving toward adopting a common cloud platform, which will reduce the need for individual data centers. Companies such as Box, Salesforce, and SAP have announced plans to utilize consolidation to make their software available to enterprises.

The increase in data center virtualization leads to the consolidation of data centers and reduces the total number of data centers. This hinders the sale of infrastructure and reduces the footprint of data centers in Western Europe. However, the consolidation of facilities requires expertise as well as time and also involves high risks. As data center consolidation increases, the market for data centers shrinks, thereby hindering the growth of the data center colocation market in Western Europe.

Key Data Center Colocation Market Customer Landscape in Western Europe

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 Colocation Market Customer Landscape

Who are the Major Western Europe Data Center Colocation Market Vendors?

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.

Colt Technology Services Group Ltd. - The company offers data center colocation solutions through Colt Data Center Services.

The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market vendors, including:

• Colt Technology Services Group Ltd.
• CyrusOne Inc.
• Data4 Group
• Digital Realty Trust Inc.
• Equinix Inc.
• iliad Group
• Iron Mountain Inc.
• IXCELLERATE LLC
• KDDI Corp.
• Lumen Technologies Inc.
• Pulsant Ltd.
• QTS Realty Trust LLC
• Servecentric Ltd.
• STT GDC Pte Ltd.

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.

What is the Fastest-Growing Segments in the Data Center Colocation Market in Western Europe?

The market share growth by the retail colocation segment will be significant during the forecast period. Retail colocation is a type of data center colocation where many enterprises rent space and integrate their own IT equipment, such as servers and storage devices, within the racks provided by the colocation vendors. Retail colocation includes the process of renting racks, rack cages, and private suites in a large data center. Retail colocation facilities are rented by vendors for one to three years of the contract. 

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The retail colocation segment was valued at USD 2,183.18 million in 2017 and continued to grow until 2021. The market for retail colocation data centers is growing due to the increasing adoption of the data centers by SMEs, which usually opt for colocation to save on both CAPEX and operating expenditure (OPEX). The adoption of colocation facilities is growing due to the increase in CAPEX and OPEX for owning and maintaining in-house traditional data centers. There is a steady transition toward colocation data centers since companies will have total control over the IT infrastructure at affordable prices. This will propel the growth of the data center colocation market in western Europe. Moreover, the low cost of retail colocation data centers is another crucial factor driving the segment growth. The retail colocation cost is around USD 1,500 for a single rack on a rentable basis, and it is expected to decline as the demand and production will increase.

The increase in the adoption of cloud-based services among SMEs will lead these enterprises to opt for colocation facilities. These SMEs are expected to add significant amounts of revenue to the retail colocation segment. Retail colocation offerings include power infrastructure, cooling solutions, network bandwidth, and security up to the rack level. Based on their business requirements, SMEs will account for a greater contribution to the revenue of the retail colocation segment when compared with the wholesale colocation segment. Retail colocation vendors offer power infrastructure, cooling solutions, and security. Also, the widespread networking capability of colocation facilities will benefit the rapidly growing SMEs. 

Segment Overview

The data center colocation 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. 

• Type Outlook (USD Million, 2017 - 2027)
  • Retail colocation
  • Wholesale colocation

• End-user Outlook (USD Million, 2017 - 2027)
  • Small enterprises
  • Medium-sized enterprises
  • Large enterprises

• Geography Outlook (USD Million, 2017 - 2027)
  • Western Europe
    • The UK
    • Germany
    • France
    • The Netherlands
    • Rest of Western Europe

Parent Market Analysis

Technavio categorizes the data center colocation market in Western Europe as a part of the global data processing and outsourced services market within the global IT services market. The parent global IT services market covers companies offering IT consulting and system integration services, application services, electronic data processing services, business process outsourcing services, infrastructure services, and Internet services. 

 

Data Center Colocation Market Scope in Western Europe
Report Coverage	Details
Page number	134
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 13.64%
Market growth 2023-2027	USD 7,000.49 million
Market structure	Concentrated
YoY growth 2022-2023(%)	13.29
Regional analysis	Western Europe
Key countries	UK, Germany, France, The Netherlands, and Rest of Western Europe
Competitive landscape	Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks
Key companies profiled	Colt Technology Services Group Ltd., CyrusOne Inc., Data4 Group, Digital Realty Trust Inc., Equinix Inc., iliad Group, Iron Mountain Inc., IXCELLERATE LLC, KDDI Corp., Lumen Technologies Inc., Pulsant Ltd., QTS Realty Trust LLC, Servecentric Ltd., and STT GDC Pte Ltd.
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
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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What are the Key Data Covered in this Data Center Colocation Market in Western Europe Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the size of the market  size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market industry across Western Europe
• Thorough analysis of the market's competitive landscape and detailed information about vendors
• Comprehensive analysis of factors that will challenge the growth of market vendors

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