Published on: November 14, 2019
Data centers are centralized facilities used for data 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 build colocation and managed hosting data center facilities and rent them to other large enterprises as well as small- and medium-sized enterprises (SMEs). We categorize the data center market as a part of the Internet Services & Infrastructure market. The Internet Services & Infrastructure market covers companies providing services and infrastructure for the internet industry including data centers and cloud networking and storage infrastructure. It includes companies providing web hosting services. Our report on the data center market provides a holistic analysis, market size and forecast, trends, growth drivers, and challenges, as well as vendor analysis of around 30 vendors.
The growth of the global data center market has been primarily driven by the increasing demand for data centers across the world. The investments in data centers are increasing significantly because of the rising data traffic and higher computing demand. The significant growth of the market can be attributed to factors such as the enterprise refresh cycles as well as the expansion of colocation data centers and hyperscale data centers (or hyperscalers). A surge in the adoption of cloud solutions is estimated during the forecast period, will also fuel the data center market growth.
The global data center market (in terms of investments) will witness an incremental growth of USD 284 billion between 2018 and 2023, thereby offering significant growth opportunities for market participants. Data center IT infrastructure segment is expected to observe the fastest growth, growing at a CAGR of 19% during the five-year forecast period. Data center IT infrastructure will also remain the largest segment constituting more than two-thirds of the total data center investments in 2019. Data center investments in North America will comprise around 38% of the global data center investments. Meanwhile, data center investments in the Middle East and Africa are expected to grow the fastest, at a CAGR of 19.4% during the forecast period.
Many factors are expected to drive growth in the data center investments during the forecast period. Our analysis identifies the following factors to be driving the growth in the data center market:
Multi-cloud refers to the use of two or more cloud computing services to deploy specific application services individually. Multi-cloud can comprise public, private, or hybrid strategies deployed based on specific requirements. Enterprises are embracing multi-cloud architecture to prevent data loss or downtime due to a localized component failure, ensure security compliances, and meet workload requirements. This strategy helps avoid vendor lock-in by a cloud service provider.
With the implementation of 5G technologies and the consequent increase in speed, the rate at which data is generated, transmitted, and consumed will grow. This will drive the demand for the upgrade of the existing data center network infrastructure and increase in new data centers constructed closer to the data origins, and reduce latency.
The global data center market is expected to grow during the forecast period, driven by an increase in investments toward planning and development of new data centers and capacity expansion of existing facilities by hyperscalers. The number of hyperscale data centers (HDCs) is expected to be more than 600 by 2021 globally. This increase in the number of hyperscalers will positively impact the global data center market.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
The threat of cyberattacks is rising with the growing adoption of cloud services and an increase in the adoption of IoT based solutions. With a rise in cybercrime, enterprise server estate is at risk of being hacked by cybercriminals, who can take advantage of the IT security loopholes to gain access to enterprise servers. These attacks can compromise enterprise data and even result in the shutting down of small enterprises. Such events would be a major challenge in the global data center market during the forecast period.
Meeting contractual schedules and performance requirements are major challenges for the growth of the global data center market. Scheduled delays generally exceed the project cost. The delay in the development of a data center generally occurs due to government inactions, public oppositions, inability to obtain financing, weather conditions, industrial accidents, and labor disruptions.
Globally, data centers account for the consumption of nearly 3% of the total world electricity. This number is expected to double by the end of the forecast period. A shift toward greener energy sources and the focus on reducing carbon emissions can hinder the market growth in the next two years, and the impact will be moderate toward the end of the forecast period as energy efficiency becomes a primary concern.
The global data center market can be segmented into the following:
We provide a detailed analysis of around 30 vendors operating in the data center market, including some of the prominent vendors such as Cisco Systems Inc., Microsoft Corp., IBM Corp., Equinix Inc., Facebook Inc., Google LLC, and Huawei Investment & Holding Co. Ltd. Investment, mergers and acquisitions, research and development to improve the product are some of the strategies adopted the manufacturers in the global data center market.
Some of the key developments mentioned in our data center market report include:
Backed with competitive intelligence and benchmarking, our data center market research is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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