Data Center Market - Global Outlook and Forecast 2021-2026

INDUSTRY INSIGHTS

The global data center market size will reach USD 251 billion during 2021-2026, growing at a CAGR of 4.5%. The global data center market size has witnessed a significant boost since the outbreak of the COVID-19 pandemic across the globe. The demand for data centers has increased because of the increased access to internet-related services aided by nation-wide lockdowns imposed by governments worldwide. The COVID-19 pandemic has significantly increased the internet traffic between 25% and 30% during the initial lockdown period (March-April) worldwide, which is 10X times than normal growth (~3% per month). Cloud-based services have observed a spike as organizations, including government bodies, require to transfer, store, and secure confidential data and information. Similarly, the impact of COVID-19 has been unprecedented on the IoT devices market. IoT-enabled devices have witnessed high acceptance for monitoring and surveillance purposes, especially in the healthcare sector. 

SNIPPETS

• The global data center market witnessed investment in over 400 facilities in 2020. With several new data center announcements built in Q3 2020, strong market growth is expected during 2021.
• Metered/monitored PDUs are likely to dominate the market as switched/managed PDUs are likely to witness high adoption among hyperscale facilities.
• Lithium-ion UPS gaining significant traction among data center operators providing a strong YOY growth.
• Latin America, Southeast Asia, and Australia are expected to witness high adoption of DRUPS.
• Several data center operators are likely to equip new data centers with efficient power solutions to reduce carbon emissions and OPEX.
• The use of free cooling techniques will drive the demand for evaporative coolers, free cooling chillers, air-side economizers, and water-side economizers in North America, Europe, Japan, and Northern China.
• The adoption of liquid immersion cooling is likely to grow as organizations are increasingly deploying artificial intelligence and machine learning workloads.

DATA CENTER MARKET SEGMENTATION

This research report includes a detailed segmentation by:

• Infrastructure 
• IT Infrastructure 
• Electrical Infrastructure 
• Mechanical Infrastructure
• Cooling Technique   
• General Construction    
• Tier Standards 
• Geography 

INSIGHTS BY INFRASTRUCTURE

The IT infrastructure market is growing due to the increasing investment in data centers and hyperscale facilities. A majority of revenue is expected to be generated by server systems, followed by storage and network infrastructure during the forecast period. The introduction of artificial intelligence-based infrastructure solutions is influencing the overall market growth. UPS's adoption with over 2 MW is high because of the increased construction of large and hyperscale facilities. Hyperscale operators are increasingly purchasing renewable energy sources to power their operations and reduce carbon emissions. To reduce power consumption, service operators are implementing innovative and energy-efficient cooling infrastructure solutions. The use of free cooling techniques has grown significantly over the last few years in regions with favorable climatic conditions that can utilize evaporative/adiabatic coolers for data center cooling purposes. The cooling systems market is expected to grow over the next few years because of redundancy and high heat generation at the rack level.

INSIGHTS BY IT INFRASTRUCTURE

The adoption of cloud-based services and the development of hyperscale facilities are expected to be strong drivers for the global IT infrastructure market. North America is likely to witness an increase in the enterprise adoption of colocation spaces for operations, which, in turn, will increase the revenue for high-performance infrastructure. Artificial Intelligence and IoT will be a strong driving force for IT infrastructure procurement in the market during the forecast period. Adopting advanced technologies such as cloud, IoT, big data, and artificial intelligence is expected to lead to high adoption of high-performance computing infrastructure during the forecast period. Cloud servers are projected to dominate the market during the forecast period due to the growing demand for cloud platforms in Western Europe. The increased construction of hyperscale facilities in the Nordic region is likely to be the major revenue booster for the IT infrastructure segment. Besides, the growing investments in data centers and the implementation of GDPR have fueled the servers market's growth over the last two years.

INSIGHTS BY ELECTRICAL INFRASTRUCTURE

Several data center facilities in North America have witnessed the implementation of 2N redundant UPS systems. Hyperscale operators are deploying end-of-rack UPS solutions supporting up to six racks. The increasing procurement of renewable energy will reduce the procurement of generator systems in the region. The UK, Germany, the Netherlands, France, and Ireland are the major contributors to the power infrastructure revenue in Western Europe. To conserve energy, the procurement of OCP-based infrastructure solutions and architecture is significant. The Nordic region is expected to witness the procurement of 48V DC UPS systems. Most Nordic region facilities are powered through renewable energy with grid stability of over 95%, which reduced the dependency on redundant generator systems.

INSIGHTS BY MECHANICAL INFRASTRUCTURE

The deployment of tall racks of 45U─52U is experiencing strong adoption in North America. Most data centers are designed based on the American Society of Heating, Refrigeration, and Air-conditioning Engineers (ASHRAE) guidelines. Data centers in North America are adopting air- and water-cooled chillers with the economizer mode to facilitate partial cooling of the facility using outside air.

Several data centers in Western Europe support free cooling systems that include adiabatic coolers, evaporative coolers, and free cooling chiller systems. Favorable climatic conditions and renewable resources such as wind energy have helped data center operators benefit from free cooling in the UK. Data centers in the Nordic region use free cooling techniques. The market facilitates free cooling of over 8,400 hours per year, and the use of free cooling systems will continue to add revenue during the forecast period. In the APAC region, data centers are built with air- and water-based cooling systems. China, Japan, Australia, New Zealand, and South Korea could be benefited from cooling systems that support free cooling and reduce the power consumption of cooling systems.

INSIGHTS BY GENERAL CONSTRUCTION

North America has a strong presence of general and sub-contractors. The competition will increase over the next few years. Expertise in developing data centers within a short time (less than one year) will be a key criterion for data center operators to select contractors. Western Europe is the most active market for data center construction. The increase in demand for data centers has multiplied the number of contractors and sub-contractors in the market. Several Europe-based construction service providers manage several major data center construction projects that include architects and engineering tasks. However, a major challenge for contractors in the region is the non-availability of skilled professionals to manage hyperscale data center projects. The APAC region has a strong presence of both local and global contractors. The average labor cost in several countries, including India, is inexpensive than in the US and Europe.

INSIGHTS BY TEIR STANDARDS

In 2020, around 15 Tier IV data centers were opened in the US, Belgium, Irelands, Netherlands, Singapore, and Sweden. These facilities generate more revenue, with focused investment on highly efficient cooling systems. The increase in data center build-out announcements from Apple, Facebook, and Google is expected to boost the tier IV market. The global Tier I & Tier II data center market is expected to register a negative CAGR during the forecast. Over the years, the increased awareness of the use of redundant infrastructure has reduced the market share.  A majority of under-developed projects worldwide fall under the Tier III category, which is likely to continue during the forecast period. However, several operators are likely to shift to the Tier IV category based on the growth in rack power density and critical data center applications. 

INSIGHTS BY GEOGRAPHY

The North America data center market is expected to reach approx. $101 billion by 2026, growing at a CAGR of over 3%. The strong growth of AI-based infrastructure solutions, increasing the rack power density over 15 kW, is a major driving factor for the market. The high procurement of NVMe-based all-flash storage solutions, coupled with the increased deployment of 25 GbE and 100 GbE switch ports, influences market growth. Also, the incorporation of custom-designed solutions, namely OCP-based infrastructure, will continue to grow. The deployment of 5G across the region is likely to result in strong data growth and application workloads, resulting in high-performance computing infrastructure procurement and the construction of edge data centers across the region.

INSIGHTS BY VENDORS

The global data center market share is characterized by several global and regional vendors, which operates under several verticals – IT, storage, network, electrical, mechanical, and general construction. The IT market witnessed significant growth in revenue contribution from ODM server manufacturers. HPE, Dell Technologies, dominate the leading revenue share in the server and storage markets. Vendor offerings are concentrated on the cloud, big data, artificial intelligence, and IoT-based application workloads. However, to gain market share, vendors should target enterprises in the APAC and MEA regions. With a revenue share of around 39%, Cisco dominated the market, and the revenue growth has been aided by strong demand for Application Centric Infrastructure (ACI) product portfolio. ABB, Eaton, Schneider Electric, and Vertiv are the leading power infrastructure players. Cummins, KOHLER-SDMO, MTU On-Site Energy, and Caterpillar have a strong presence in the generators market.

The data center market research report includes in-depth coverage of the industry analysis with revenue and forecast insights for the following segments:

By Infrastructure 

• IT
• Electrical
• Mechanical
• General Construction

By IT Infrastructure 

• Servers
• Storage
• Network

By Electrical Infrastructure 

• UPS Systems
• Generators
• Transfer Switches and Switchgears
• PDUs
• Other Electrical Infrastructures

By Mechanical Infrastructure

• Cooling Systems
  • CRAC & CRAH Units
  • Chiller Units
  • Cooling Towers, Dry Coolers, & Condensers
  • Other Cooling Units
• Racks
• Others Mechanical Infrastructure

By Cooling Technique    

• Air-based Cooling Technique
• Liquid-based Cooling Technique

By General Construction    

• Core and Shell Development
• Installation and Commissioning Services
• Engineering and Building Designs
• Physical Security
• DCIM/BMS

By Tier Standards 

• Tier I & II
• Tier III
• Tier IV

By Geography

• North America 
• US
• Canada
• Latin America
• Brazil
• Other Countries
• Western Europe
• UK
• Germany
• France
• Netherlands
• Ireland
• Other Countries
• Nordic
• Denmark
• Iceland & Finland
• Norway
• Sweden
• Central & Eastern Europe
• Russia & Czech Republic
• Poland & Austria
• Other Central and Eastern Countries
• Middle East
• GCC
• Other Middle Eastern Countries
• Africa
• South Africa
• Kenya
• Other African Countries
• APAC
• China & Hong Kong
• Australia & New Zealand
• India
• Japan
• Rest of APAC
• Southeast Asia
• Singapore
• Malaysia
• Thailand
• Indonesia
• Other South Eastern Countries