Global colocation market growth eases while COVID-19 presents opportunity

Growth hovered just over eight per cent for 4Q19

Colocation providers have seen their revenue growth shrink amid the coronavirus pandemic, recent analysis has shown.

Although data centre services and colocation revenue for the fourth quarter of 2019 grew by 8.1 per cent year-on-year to US$3.4 billion, the figure represented a falling growth rate from Q2's 10.6 per cent.

Despite the dip, the colocation market has potential for growth due to the coronavirus pandemic, according to Technology Business Research’s (TBR) Colocation Benchmark report.

“COVID-19 will drive some momentum in this market as customers with strained resources will turn to third-party assistance to better manage surges in demand,” the TBR analysis claimed.

“While the start of 2020 may have been rocky for some vendors as they dealt with the transition of data centre personnel due to COVID-19, data centres are deemed critical infrastructure and surges in demand will offset many negative effects.”

The drop is also not expected to deter market players to continue with expansion initiatives, especially in the US, the report added. 

Japan-based NTT Communications was noted for moving its overseas subsidiaries into the UK-based NTT Ltd to better capitalise on the potential international market opportunity, TBR stated.

Credit: TBR

Equinix remained on top, recording over US$1 billion in quarterly colocation revenues. The other end of the scale meanwhile saw the smallest market player, Vantage, recording quarterly revenue of under US$10 million.

As many of these vendors are privately held, outside funding is typically considered for securing new client growth and increasing utilisation rates, TBR noted, which has been noted with Vantage and Flexential, particularly in Europe.

Some public companies are also making the move to expand in Europe, such as Digital Realty.