There's no sign that the co-location data center market is declining. According to a report from Allied Market Research, the global data center colocation market was valued at $46.08 billion in 2020, and could reach $202.71 billion by 2030. How companies use co-location, though, is changing to meet distributed data networks, edge computing and high-throughput data processing needs.
Top drivers for co-location investment include running out of space and convenience, said Calvin Nicholson, senior director of Product Management Power at Legrand. There's also the added help of co-location service providers that have skilled maintenance and facility staff, so organizations can just access their data without the need for daily hardware upkeep.
"It's very expensive to build a data center, so I think in some cases it tides [organizations] over until they have a chance to build or maybe go wholesale or have some other plan. [Co-location] really gives them a lot of choices," he said.
Disaster recovery is another big use case for co-located data centers, due to their convenience, but also the fact that co-location is a way to securely store data without having to build out infrastructure or move applications to the cloud.
Co-located data centers are helping organizations bring their processing power closer to the data source; the use of this infrastructure to reduce latency is a major driver in the market -- especially as edge computing and IoT use cases grow. Co-location is a great option for organizations that don't want to invest or constantly manage hundreds of distribution points.
"Enterprise outsourcing is a big driver. You're seeing the importance for distributed content. However, these shared platforms need to have the interconnectivity piece so it then becomes [having] well-located interconnectivity or well-located co-location sites around fiber-rich locations," said Jon Mauck, managing director at Digital Colony.
The co-location data center market and cloud
Of course, with the state of the cloud technology market, organizations may wonder if co-location is the right choice. Though the cloud sector is rapidly growing, there are also concerns about control, security and if cloud architecture is suited for certain applications.
As organizations look to increase digital diversity, experts state that it's more likely co-location and cloud will simultaneously exist as part of infrastructure.
"I think there's always going to be applications or solutions that the customers are going to want to hold on to and maybe aren't going to trust in the cloud as an example. I think you're going to see them both grow, and the one change we have seen, obviously, is the regular kind of user enterprise data center is growing or maybe even shrinking some as co-location and cloud grow," said Nicholson.
Additionally, organizations can use both co-location and public cloud to build out specialized infrastructure that they might not be able to otherwise support, such as storage. In doing so, organizations can expand their customer service offerings without having to build a completely new data center -- and admins can still have control over the specialized hardware.
Edge use cases advance hardware
Edge computing is the next major driver for the co-location data center market, as these data centers help and provide infrastructure and processing centers. With the influx of data and edge computing deployments, organizations want to severely reduce latency and get hardware as close to the data as possible.
In order to support growing edge deployments, co-located data centers and co-location providers must invest in network interconnect hardware and power equipment to provide high-speed data processing and constant uptime -- and act as data distribution points. This will help organizations support regional applications and get data closer to the customer.
Co-location providers can draw business by equipping data centers with the latest Fibre Channel connections, software-defined networking and high-bandwidth wireless options. Remote network monitoring and management is another plus to attract customers within the co-location data center market.
Efficient power utilization is key, especially as co-located data centers increase rack density, and power requirements change from facility to facility.
Experts are seeing the emergence of microgrids -- independent, free-standing power grid sources -- that can help support more localized infrastructure and operate separately from any main power grid within the area.
The ability to disconnect from the main grid means that co-located data centers could exist beyond state- or government-provided infrastructure, but also at a lower cost or automatically have a backup power option beyond generators. They are also a way for data centers to get power if the surrounding grid infrastructure is unreliable.
Micro grid power technology is still in its early days, and the industry must wait and see what role it plays in helping reduce data center density and footprint, Mauck said.
Managing diversifying digital infrastructure
Remote management and automation are additional considerations for co-location providers, especially as organizations want more infrastructure flexibility, said Scott Sinclair, senior analyst at Enterprise Strategy Group.
"We find CIOs want as much consolidation sophistication as a boss and get as much freedom and diversity of [technology] choices they could possibly have. And those are two separate things that kind of work against each other," he said.
With the right toolsets and management options, admins can get the right information to the right people within the organization, technical and non-technical alike. These programs can also help optimize how organizations track and move data.
Automation is an increasingly beneficial management tool, as companies generally manage a mix of co-located data centers, on-premises facilities and cloud.
"Often, we see among companies that there is some internal development around automation. In terms of their policies and their various automation tools, even open source, that has helped try to solve these challenges," he said.
Ultimately, the co-location data center market is shifting to ensure organizations can effectively store their data and support growing infrastructure needs; but getting as close as possible to the data source – and securing it -- is essential.
Sinclair said he predicts an increase in number of locations and desire to use co-location for both traditional and data-driven companies. This also will boost investments in data security wherever the data lives.