The rising demand for Infrastructure as-a-Service (IaaS) from organizations across industries has been a major driving factor for data center colocation market. Data center colocation refers to renting suitable secured physical space, bandwidth and resources within a third-party data center facility, for hosting an enterprise's servers and storage systems. Colocation helps businesses cut down significant costs of building and maintaining an on-premise data center. It provides infrastructure services like storage, servers, security systems and networking components on pay-per-use model which offers great flexibility compared to owning an in-house data center.

The global data center colocation market is estimated to be valued at US$ 74.22 Bn in 2024 and is expected to exhibit a CAGR of 8.0% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the Infrastructure As-A-Service Market are Rubicon Technology Inc., KYOCERA Corporation, Saint-Gobain, SCHOTT AG, Monocrystal, Rayotek Scientific Inc., CRYSTALWISE TECHNOLOGY INC., ILJIN Display CO. Ltd, Namiki Precision Jewel Co., Ltd., Juropol Sp. z o.o. These players are focusing on expanding their data center facilities globally and offering comprehensive colocation and connectivity solutions.

The rising demand for cloud computing and growth of hyperscale data centers present significant opportunities for market players. Growing popularity of cloud-based applications and services has been prompting global expansion of colocation infrastructure. North American and Asian markets are expected to witness tremendous growth owing to rapid digital transformation in the regions.

Market drivers - Cost efficiency and scalability offered by data center colocation driving its adoption. Colocation allows organizations to avoid huge capital expenditures and shift costs from capex to more flexible opex model. It delivers reliable infrastructure services and resources on demand based on business needs.

Market restraints - Concerns around latency issues and dependency on third party providers limits the growth of some organizations. Colocating critical systems at a remote facility of third party can increase latency compared to owning local data center. Any service disruption or failure at the third party facility also impacts colocated customers. Additionally, locking into long term contracts with colocation providers limits flexibility.
 

Segment Analysis

Managed Infrastructure as a Service segment dominates the market as it lowers management costs for businesses and enhances operational flexibility. Dominated by large enterprises, this sub-segment sees majority adoption due to focus on core competencies rather than investing heavily into IT infrastructure and its maintenance and upgradation.

Platform as a Service sub-segment is the fastest growing segment owing to increasing adoption of cloud-based platforms for application development and delivery by SMEs. The on-demand delivery model of PaaS eliminates upfront software licensing costs and lowers total cost of ownership.

Global Analysis

North America region dominates the Infrastructure as a Service market currently owing to high adoption of cloud computing models among enterprises to achieve scalability and optimize operational costs. Growth catalysts include greater IT budgets of organizations and strong government backing for digital initiatives in the US and Canada.

Asia Pacific region is poised to grow at the fastest pace during the forecast period driven by increasing investments in digital transformation projects across industries in major economies like China and India. 5G infrastructure build-out, smart city projects and focus on supporting SMEs will substantiate regional market expansion.

Get more inisghts on Infrastructure As-A-Service Market