The top 145 cloud and colocation companies are now estimated to account for 40% of all data center square footage worldwide, according to a new study by IHS. This is a remarkable figure given that Amazon’s AWS (the largest provider of IaaS) set up its first data center just ten years ago, in 2006. It was at this same time that Equinix (the top colocation provider) first purchased a data center campus in Ashburn, Virginia, a region that over half of the internet’s traffic now travels through. Cloud and colocation (colo) companies are growing (and building data centers) fast – and it’s changing the data center market in significant ways.
The domination of the data center market by just 145 cloud and colocation companies means that there are a decreasing number of companies accounting for an increasing percentage of spend on data center infrastructure. This has a couple consequences – first, it creates volatility in the market for data center infrastructure suppliers. When just a few large companies account for such a great share of the market, builds and purchasing of equipment will ebb and flow more than what is historically typical. Second, it means that these cloud and colo companies have an increasing ability to negotiate for lower prices. One lost sale to a major cloud or colo provider could make or break a data center infrastructure supplier’s revenue target for the year. Cloud and colo players know this and use it to their advantage when seeking best pricing.
Going forward, IHS expects that cloud and colocation companies will account for an ever greater share of data center investments. Liz Cruz, an Associate Director in the Cloud and Data Center Research practice at IHS comments “I would not be surprised if, in just a few short years, we see cloud and colocation companies approaching the 60% mark in terms of ownership of data center square footage worldwide. The pace at which they are building, and at which regular enterprise users are outsourcing their own data center operations to those cloud and colo companies, is phenomenal, and there are no major roadblocks ahead. Sure, some enterprises may still choose to keep a few mission-critical applications ‘in-house’, but a growing adoption and acceptance of the cloud is leading to a hybrid approach to data center operation that allows for an increasing number of applications to be managed by cloud providers, which themselves are moving into colocations, causing the need for more colocation facilities to be built as well.”
IHS Markit now tracks data center operations of the top 145 cloud and colocation companies. For more information on the scope of the report and who these 145 companies are, please contact Liz Cruz at IHS.
For more information please contact:
Associate Director of Data Center Infrastructure
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