Amazon, Google, others are fastest-growing customers for data center service providers like Equinix and Digital Realty, Synergy says
Hyperscale data center operators trying to keep up with rapidly growing demand for their cloud-based services are becoming increasingly important customers for colocation providers, according to a recent report from the Synergy Research Group.
The Lowdown: The market research firm’s study follows another one by analysts there that showed even as spending on hardware and software for on-premises data centers declines, spending on public cloud infrastructure continues to grow.
The Details: Enterprises are moving more workloads into the cloud to take advantage of easier management, agility, scalability, and cost efficiencies, driving cloud service providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud to continue to invest in expanding their data center environments. That has become a boon for data center services and colocation providers like Equinix, Digital Realty, and CyrusOne, as these hyperscalers – which also include social media giants like Facebook and Twitter – look to lease data center space on both the wholesale and retail sides, according to Synergy.
The report found that while the colocation market overall grew 7% year-over-year in the first quarter – to about $9.5 billion – the revenue derived from hyperscale operators jumped 22% in the wholesale segment and 9% in the retail arena. By comparison, enterprise spending on wholescale colocation was essentially flat in the quarter, though enterprises continued to increase their spending on retail colocation.
Other non-hyperscale service providers – such as telcos, other cloud providers, Internet service firms, and hosting and outsourcing companies – also grew their colocation spending.
The Asia-Pacific region saw the strongest colocation growth, followed by Europe, the Middle East and Africa (EMEA), and North America.
The Impact: Synergy said the global colocation market was essentially unaffected by the COVID-19 pandemic, which has accelerated enterprise migration to the public cloud but also heightened the slowing spending on on-premises data center infrastructure. Hyperscalers are the fastest-growing customer segment for colocation and data center service providers, which also includes such companies as NTT, QTS Data Centers, and China-based GDS.
The Buzz: “Hyperscale operators continue to grow their revenues at double-digit rates and to maintain CapEx spend at $30 billion per quarter, the majority of which is targeted at their data center infrastructure,” said John Dinsdale, chief analyst at Synergy. “As part of that, they rely on colocation providers to lease out both large wholesale facilities and capacity at smaller edge locations. Hyperscale operators continue to become an ever-more important source of business for leading colocation companies such as Equinix, Digital Realty, NTT, CyrusOne, QTS, and GDS. This market has remained mostly unaffected by COVID-19.”