The market forces propelling colocation in recent years remain in place for 2022, but industry executives expect an additional boost from a diversifying customer set and technologies such as AI.
The COVID-19 pandemic encouraged businesses with on-premises data centers to adopt colocation amid the remote work shift. Customers with stringent security requirements or high-performance needs also tapped colocation as an alternative to public clouds. The rise of edge computing and increased interest in IT resiliency also favored colocation. Those forces, still in play, continue to drive demand for data center services. Allied Market Research (AMR), based in Portland, Ore., forecasted the global colocation market to grow at a 15.7% compound annual growth rate through 2030. At that point, AMR said colocation spending will exceed $200 billion.
Additional factors, however, will shape colocation trends in 2022. Here are three developments to watch this year.
1. Smaller footprints
A number of market forces are converging to shrink the colocation footprint.
For one, small businesses and early-stage companies, as well as traditional enterprise customers, now identify colocation as a component of their hybrid IT strategies, said Russell Cozart, senior vice president of marketing and product strategy at Cyxtera Technologies, a colocation services and interconnection provider based in Coral Gables, Fla.
Smaller enterprises go for smaller deployments, which service providers accommodate. Cyxtera, for example, offers what it terms smart cabinets, or SmartCabs. The offering, which features built-in power and core networking, starts as small as a quarter cabinet, Cozart said.
Companies of all sizes, however, want to move IT resources closer to their customers' locations. "We're starting to see smaller footprints happening in more markets, rather than customers putting all of their resources, all of their systems, in a single market or in a very large footprint," Cozart said.
Russell CozartSenior vice president of marketing and product strategy, Cyxtera Technologies
Patrick Giangrosso, vice president at Mission Critical Facilities International, a data center power and cooling infrastructure company in Spicewood, Texas, has seen the shrinking-footprint trend play out with respect to the types of data centers under construction.
"While we expect the colocation market to continue to grow in above-10-megawatt deployments to meet hyperscale demands, we are starting to see a shift to smaller, sub-5-megawatt data centers being built in second- and third-tier cities," he said.
Data center companies realize end users need lower latency and greater compute power closer to the load, Giangrosso said. That same combination also helps businesses meet their growing use of IoT, he added.
2. AI optimization
The rise of AI across a range of industries has sparked customer interest in colocation facilities designed for the environmental demands of GPUs.
"We're moving into the mass-market, democratization phase from what we see -- Fortune 500s to startups, across all industry segments, all incorporating [high-performance computing] and AI," said Ben Coughlin, co-founder at Colovore, a colocation services provider in Santa Clara, Calif.
GPUs, along with variations such as data processing units (DPUs) and infrastructure processing units (IPUs), are transitioning from technical curiosities to the core building blocks of compute servers. "This is driving the need, on our side, for data centers that are specially engineered to support the kind of power and cooling these systems need," Coughlin said.
The problem stems from the power requirements and heat production of next-generation processor architectures. Fifteen years ago, a single rack unit server would draw 50 watts of power, but today's GPUs, DPUs and IPUs draw 1 kilowatt per 1U server, he said. The typical data center can support power and cooing for one or two AI cabinets. But, as rows of cabinets become the norm and compute density increases, a traditional data center's ability to cope declines, he added.
"The cooling becomes a really difficult barrier to any legacy environment," Coughlin said. "The 20x increase in terms of power consumption per rack unit is driving all of this."
Colovore's cooling systems include evaporative cooling towers, located outside of a facility, and rear-door heat exchangers at the cabinet level, he noted. The company also employs direct liquid cooling. Methods can vary, with options including direct-to-chip cooling and heat exchangers specific to a given server platform, Coughlin said.
3. A continued push for sustainability
Keeping a close watch over data center energy use will continue to rank among the top colocation trends. In 2021, some colocation providers rolled out carbon-neutral services or stated carbon-reduction commitments. That pattern looks set to continue this year. Customers prioritizing sustainability will look for improved cooling and power utilization and, in general, a reduction of environmental effects.
Questions, however, revolve around sustainability approaches and their cost.
To date, most colocation companies have addressed sustainability through green power, such as solar, Giangrosso said. But building solar facilities is impractical for data centers located in densely built-up cities, where land is unavailable for large solar projects, he noted.
But green power isn't the only consideration, according to Giangrosso. "The data center community needs to address the whole ecosystem for designing and building a data center, including how suppliers are also addressing sustainability within their own operations," he said.
As for economics, the cost of becoming sustainable can prove higher than the baseline of maintaining current operations. Colocation providers will pass the additional expense to customers.
"End users need to be willing to pay extra for a data center with sustainable operations," Giangrosso said. "[It's] no different than how consumers are willing to pay more for food that is organic or protein that is ethically raised."