Drivers and forecasts for data center colocation market in APAC

The report also lists retail and wholesale as the two major segments based on type of colocation

Photo Credit : Technavio,

Technavio market research analysts forecast the data center colocation market in APAC to grow at a CAGR of more than 16 percent during the forecast period, according to their latest report.

The market study covers the present scenario and growth prospects of the data center colocation market in APAC for 2017-2021. The report also lists retail and wholesale as the two major segments based on type of colocation, of which the retail segment accounted for close to 79 percent of the market share in 2016.

Technavio ICT analysts highlight the following four market drivers that are contributing to the growth of the data center colocation market in APAC:
* Increased adoption of cloud and IoT technologies* Reduction in capital and operational expenditure* Availability of advanced network connectivity
* Increased support from governments.
Increased adoption of cloud and IoT technologies 
According to Abhishek Sharma, a lead analyst at Technavio for data center research, “The significant increase in Internet traffic over the past five years, has also increased the need for the enterprises to operate through technologies such as cloud and big data.”

Owing to the increased adoption of advanced technologies for business operational needs, enterprises in APAC are prompted to expand their data center footprints. The main contributors to the increase in data centers include CSPs, telecommunication organizations, and colocation service providers. 

The increased demand for retail colocation spaces in APAC is witnessed through higher investments in data center construction by colocation and telecommunication service providers such as NTT, China Telecom, China Unicom, China Mobile, Equinix, Global Switch, and others.

Reduction in capital and operational expenditure

Business operational demands are growing among enterprises in APAC, which is leading to an increase in data center construction activities. The construction and operation of data centers involve high capital expenditure. 

With the inception of colocation, enterprises with less need for data centers can colocate space from the existing data center operators. Data center colocation reduces the need for capital investment that is involved in the construction of data centers. Many SMEs with lower IT budget will also be able to operate through data centers, enabling higher availability for the services offered.

“In addition, the vendors offer uninterrupted services and maintenance of data center facilities, which increases the productivity and performance of the enterprises,” he says.

Availability of advanced network connectivity

Enterprises are witnessing a rapid increase in the digital content transmitted and manipulated in their networks. The adoption of colocation services makes it easier for enterprises to manage network dynamics, control traffic flow, and scale up data center infrastructure efficiently.

Many enterprises in APAC also require better interconnection to public and private cloud environments operated by the CSPs. Interconnections also enable better connectivity and higher availability of services as demand grows. Colocation providers such as Equinix and Digital Reality enable interconnectivity between their facilities in APAC and extend it to the major cloud data centers to grow their customer base.

Increased support from governments
In APAC, many colocation providers and CSPs are being welcomed by the respective governments to establish their facilities as it will facilitate the growth of their countries' economies. 

For example, the Thai government supports data center investment from SUPERNAP, which aids in growing the digital economy, while encouraging more investment in the future. Most of the countries in APAC welcome foreign investments from colocation providers. This aids in overcoming the increased need for IT operations for local customers as well as social media platform operators such as Facebook.


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