Colocation hosting is a service that allows small and large enterprises to install their servers (or hire a server on rent) at a data center service providers location. This allows enterprises to focus on their core business and not worry about the IT needs of their organization. The report analyzes the current and future prospects of the colocation market, as the demand for colocation hosting is constantly on the rise. The study covers the market by end user type to provide in-depth analysis of potential of the market in key industry verticals. The market opportunities in developed and emerging nations are analyzed so that companies can develop strategies to tap targeted markets.
The key driver for the market growth is that it is a cost effective solution for enterprises as compared to storing their server at their own premises. It saves the room space requirement and cost of cooling and heating along with the need for IT expertise. Additionally, colocation provides high data security as the service provider gives secured logins to the network administrators of the company and third person can’t access the data. However, high start-up cost and constantly fluctuating operational cost are restraints for the market, as these factors don’t allow organizations to keep control over the cost. Moreover, colocation data centers are not available at strategic locations, which increase the complexities to manage the servers. The combination of colocation data center with cloud computing is an opportunity for the market growth, as it allows flexibility and advanced bandwidth features.
Colocation Market By Solutions
The market is segmented on the basis of retail solution and wholesale solution for colocation hosting. The retail solution consists of shared rack space and is generally preferred by small and medium enterprises (SMEs). The wholesale solution allows companies to have a dedicated rack space or floor space to host their servers. The retail solution is expected to have a higher growth rate as it is projected that more SMEs would opt for retail colocation hosting due to cost effectiveness and availability of higher bandwidth.
Colocation Market By End-users
The end-user market is segmented into SMEs and large organizations. Large organizations are further segmented into Banking, Financial Services and Insurance (BFSI), government and public sector utilities, Telecommunication & IT and healthcare & life sciences. The large organization are having a higher market share, with BFSI sector having the lion’s share. The share of large organizations is more as they have opted colocation services on a large scale. However, it is expected that the SMEs would have a better growth potential as more small businesses would opt retail colocation services.
Colocation Market By Geographies
The geographical segmentation of the market consists of North America, Europe, Asia-Pacific and Rest of the World (RoW). The North American region is projected to have the highest revenue share as colocation hosting services were opted by organizations in this region very early. However, the economic growth in the developing countries of the Asia-Pacific region would encourage more organization to opt for colocation hosting. Therefore, this region is expected to have the highest growth rate.
The principal strategies adopted by key companies in the market are partnerships and collaborations, as it allows providing strategic location services to clients, which is a key growth challenge. Some of the key companies profiled in the report are AT&T, Dupont Fabros Technology, Equinix, IBM, Navisite, Rackspace, NTT Communications, Telecity Group, Verizon Terremark and Windstream.
High level Analysis
The report analyzes the bargaining power of buyers & suppliers and the threat of substitute products and new entrants based on the Porter’s five force model. There are many suppliers in the market as the market is well established; therefore, the bargaining power of buyers is high. The suppliers have to constantly make innovations in their services to attract buyers, thereby reducing their potency. The threat of new entrants is low as colocation services require huge capital investment in infrastructure. The threat of substitutes is high as technological advances have led to the advent of cloud computing as an alternative. The market rivalry is low as companies are forming strategic alliances to lessen the impact of substitute services. The impact analysis of the top ten factors affecting the market is provided for the short and medium term. The key investment pockets are analyzed based on the growth estimations of each segment. The key strategies adopted by the companies are analyzed in detail to give implications of the competitive scenario.
The global colocation market is segmented into solutions, end-users and geographies; the segments are as follows: