Why colocation is becoming the “nexus” of cloud and enterprise IT

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Global colocation revenues are going up and are in track to reach more than $33bn (£23bn) by 2018 according to the latest forecast from 451 Research. Yet the latest figures, argue the analysts, mean the data centre industry is maturing rather than in any trouble.

2015 was the best year on record for deals in the data centre, hosting and managed services sector, according to 451. The two most prominent companies in the colocation space are Digital Realty and Equinix; the former commands the most real estate by square feet (7.8% of share), while the latter, despite having less than half of the footprint, coughs up the most annual revenues (8.1% compared to 5.6% for Digital Realty).

According to the research, the largest global region in terms of operational space is Asia Pacific (40.1%), followed by North America (33.7%) and EMEA (22.1%). By 2018, the overall footprint for global colocation will be at 176.5 million, up from 132.4 million today.

“Colocation is quickly becoming the nexus of both cloud and enterprise IT,” said Katie Broderick, 451 research director. “The colocation market is serving as ‘data centre arms dealer’ to both enterprises and the cloud. In this process, colocation is often becoming the strategic connection point between the two.”

These figures continue to be one in the eye for those who predicted cloud would kill the data centre. As a Logicworks post explained in February: “As enterprises begin to move ‘easy’ workloads to [providers such as] AWS, they want to move not-ready workloads to a managed environment outside their internal data centres.

“Colocation is rising in popularity precisely because enterprises want cloud,” it adds. “It fits well into a hybrid cloud plan, helps enterprises consolidate data centres, and helps transition people and processes to a shared responsibility model.”

For data centres overall, the leading market continues to be the US. According to the latest figures from Synergy Research, almost half (46%) of major cloud and internet data centre sites are based there, with China second placed at only 6% of coverage.

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