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Data Center Market - Global Outlook and Forecast 2020-2025

(2020 Edition)

SKU : ARZ200110
  • Published on : February 2020

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This market research report on the global data center market cover market sizing and forecast, share, industry trends, growth drivers, and vendor analysis. The study includes insights on the segmentation by IT Infrastructure (servers, storage, and network), Electrical Infrastructure (uninterruptible power supply (UPS) systems, generators/DRUPS systems, rack power distribution units (PDU), transfer switches & switchgears, and other), Mechanical Infrastructure (cooling systems, racks, and other mechanical infrastructure), Cooling Systems (CRAC & CRAH units, chiller units, cooling towers, dry coolers & condensers, economizers & evaporative coolers, and other cooling units), Cooling Techniques (air-based and liquid-based), Liquid Cooling Techniques (direct-to-chip, liquid immersion, and water-based), General Construction (building development, installation and commissioning services, building designs, physical security, data center infrastructure management (DCIM) & building management systems (BMS)), Tier Standards (Tier I and II, Tier III, and Tier IV), and Geography (APAC, North America, Europe, MEA and Latin America).

Market Dynamics

The data center market is witnessing significant investments from colocation service providers, cloud/hyperscale service providers, and telecommunication service providers. Hyperscale data center investment has grown significantly in the past years, led by Google, Facebook, AWS, Alibaba, and Microsoft. The market witnessed investment in over 100 facilities with the power capacity of over 15 MW. Telecommunication providers in several countries are investing heavily to grow broadband connectivity worldwide. Moreover, government agencies are fueling the growth of the digital economy in several countries and initiatives toward the development of smart cities will continue to boost the need for edge computing during the forecast period. 

The demand for colocation and managed service is growing in the global market due to technological advancements across industries. The market witnessed investment in over 300 colocation projects. This includes investments in new facilities as well as expansion projects. Many enterprises in developed countries are migrating to colocation data centers to operate hybrid infrastructure services. In the US region, colocation service providers are making substantial contributions to hyperscale data center projects. Several colocation service providers are investing more than $200 million in new construction and expansions in the data center colocation market worldwide. Colocation service providers are investing in major hyperscale projects in developing countries. China, Australia, Hong Kong, and India are expected to be the major destination for colocation investment in APAC during the forecast period.

 

Another major factor driving the data center market is the availability of tax incentives, renewable energy sources, and reliable electricity supply. Over the past few years, data center growth has been concentrated in countries that offer tax incentives. Several state and local governments provide investment and sales tax incentives based on economic development, where incentives focused on effective facility operations and renewable energy sources procurement that are likely to increase during the forecast period. For instance, in India, state governments in Telangana, Gujarat, Andhra Pradesh, and Maharashtra governments have announced incentives for data center development in 2019.

Snippets

  • Increase in digitalization across businesses will continue to grow the data center investment from colocation, cloud, internet, and telecommunication provider
  • The increased investment in submarine cable projects will enhance in-land connectivity and reduce latency, thereby boosting market growth worldwide.  
  • The ODM market will continue to grow as hyperscale is currently involved in a five-year plan on expanding facility infrastructure investing billions of dollars
  • The US market will continue to dominate, with the contribution from over more than 130 new and expansion projects identified in the US.
  • Several new investors, including EdgeCore, Echelon Data Center, Chayora, PointOne, Giga Data Center, Yotta Infrastructure Solutions, Adani Group, and Archer Data Center, are aiding the growth of hyperscale infrastructure worldwide.
  • The cost of lithium-ion UPS is two times more than VRLA batteries, which is likely to reduce by 2024, thereby expecting to increase their application. 
  • The incorporation of automation through artificial intelligence and machine learning software to manage power is likely to grow in the market

 The global data center market is expected to grow at a CAGR of over 2% during the period 2019–2025. 

 

Data Center Market: Segmentation

This research report includes detailed market segmentation by IT infrastructure, electrical infrastructure, mechanical infrastructure, cooling systems, cooling technique, liquid cooling technique, general construction, tier standards, and geography.

 

Insights by IT Infrastructure

The demand for servers will continue to grow during the forecast period as service providers are expanding their presence world over. The demand for servers with multicore processors and memory will grow as the average number of virtual machines per physical server is likely to grow. Enterprise will prefer IT infrastructure that can enable them to reduce space in the data center environment without affecting their performance. In 2019, the storage systems market was driven by the increased adoption of all-flash storage arrays and hybrid storage arrays. The growth of flash storage systems is aided by high-performance operations that require strong I/O capabilities. All-flash storage systems are supporting the increasing deployment of applications related to big data and AI technology. Several innovations have surrounded in the network space in the last several decades. 25GbE and 100GbE switches witnessed strong growth in 2019. The increase in the data traffic is increasing the complexity both in the internet and the internal data center network.

Insights by Electrical Infrastructure

The adoption of lithium-ion batteries is likely to increase during the forecast period as their price will continue to decline significantly. It is expected that the contribution from colocation providers will be high in terms of lithium-ion UPS solutions. Generators will continue to grow because of the continuous construction of large and mega facilities across the globe. Many data centers in North America and Europe, where the requirement for generators with higher redundancy is less, are being established and powered by renewable energy sources. The adoption of Diesel Rotary Uninterruptible Power Supply (DRUPS) systems will continue to witness growth among developing countries. Regions such as Latin America and Southeast Asia are the major revenue generators for DRUPS systems. Although diesel generators are not eco-friendly, their use is important in regions with frequent power outages, namely, Latin America, Africa, and parts of Asia. The market for managed/monitored PDUs will witness steady growth during the forecast period.

With the increased data center construction across the globe, the market for transfer switches and switchgears is expected to grow during the forecast period. However, the use of switches will vary significantly based on capacity supported, cost, mean time between failures (MTBF), switching time, and design. In developing countries, modular facility deployments will also include low-voltage switchgears as they are innovating and efficient.

Insights by Mechanical Infrastructure  

Data centers in Southeast Asia, China, India, Australia, the Middle East, and Africa are likely to prefer chilled water systems or a combination of both air and water-based cooling techniques. Free cooling chillers that facilitate partial cooling using outside air are highly preferred. Service operators are looking for efficient solutions to reduce their CAPEX and OPEX, conserve space, and reduce the power consumption of cooling units. Most modern facilities are being built based on the ASHRAE data center cooling guidelines and the Uptime Institute’s tier standards for redundant design. The increased use of rack scale converged infrastructure systems that support artificial intelligence and machine learning workloads in data centers will have an impact on the rack power density. The OCP rack architecture will witness strong growth along with rack units of over 45U. Vendors are also continually innovating their rack designs to provide airflow perforation, enhance cabling channels, and support more weight capacity.

 Insights by Cooling Systems

With data centers now being built to handle more than 10 MW of IT load, the use of multiple CRAC and CRAH units split across data halls, and containment designs are growing. The market will continue to grow that use DX or chilled-water cooling solutions. Data centers are likely to adopt 2N CRAC or CRAH units, whereas other facilities are expected to go for N+N systems. The facilities are now being built with flexible designs, in which additional or high-power capacity units can be incorporated within days or weeks, depending on the customer’s requirement.

Several facilities are being developed in the regions such as North America, Western Europe, Eastern Europe, and Nordic, to benefit from free cooling techniques; hence, the adoption of indirect evaporative cooling systems is likely to grow over the next few years. Several modern offerings by vendors include a combination of systems that use cold air outside during winters. The adoption of these systems is mostly focused on reducing electricity by data centers and improving efficiency through reduced PUE i.e., less than 1.5. and carbon emissions.

Insights by Cooling Techniques

The data center operators in the US, Europe, Nordic, China, Australia, New Zealand, Canada, and Japan are mainly using free cooling solutions. The market is witnessing the increased adoption of evaporative coolers that facilitate partial cooling with indoor CRAC units being used among data centers. Innovations in the free cooling space, especially with the use of outside air for cooling without any on-site water requirement, will continue to grow the market during the forecast period.

Although the growth of liquid-based cooling techniques is higher among direct liquid cooling and immersion cooling solutions, the adoption of chilled water systems is likely to decline over the next few years due to the growing need for cooling solutions that do not require water. The operators are constantly installing on-site water tanks, water treatment, and recycling plants to reduce water consumption. The adoption of free cooling chillers is likely to increase due to the reduction in power consumption by these systems during cold seasons, thereby facilitating the use of outside air for cooling.

Insights by General Construction

The global data center market has a strong presence of general contractors. The competition among general contractors is expected to increase during the forecast period. Expertise in developing facilities in a short period will be key criteria for service operators in the selection of general contractors. Many operators have a strong partnership with general contractors. However, the major challenge for several contractors in the region is the unavailability of skilled workforce to manage multiple hyperscale projects. The importance of physical security will increase in the market, where DCIM adoption will include support from artificial intelligence and machine learning in the market.

Developing regions/countries such as Latin America, Indonesia, Thailand, and India are experiencing strong growth in greenfield construction. This will bring significant revenue opportunities for contractors and subcontractors operating in the market. Most enterprise operations include the procurement of modular infrastructure solutions from local service providers. Modular data center deployment is growing among enterprise customers worldwide.

Insights by Tier Standards

With the increasing focus on building highly efficient and reliable data centers, the investment in Tier IV facilities is expected to grow across the globe. Most new facilities are designed as Tier III standards with minimum N+1 redundancy and can be reconfigured with up to 2N redundancy as the demand arises. A majority of under-developed projects across the globe fall under the Tier III category. This trend is likely to continue during the forecast period, with many operators expected to move to the Tier IV category based on the growth in rack power density and critical applications. In terms of colocation, these facilities will cost more on a per rack basis than the Tier I and Tier II facilities. Most new facilities are designed to be of Tier III standards with a minimum of N+1 redundancy and can be reconfigured with up to 2N+2 redundancy as the need arises, with the incorporation of flexible designs.

Insights by Geography

North America is the leading market for cloud computing, big data, and IoT technologies. Many colocation providers such as Equinix, Root Data Centers (Compass Data Centers), Cologix, QTS, Vantage Data Centers, and Flexential have invested in facilities with a rentable area of over 100,000 square feet across North America. Besides, major contributors to hyperscale facility development are Facebook and Google in the US. During the forecast period, the market investment from Facebook, Google, Microsoft, and Apple will continue to grow. For instance, Facebook is investing in Ohio, New Mexico, Nebraska, Texas, Oregon, and Virginia in the US. Industry verticals such as e-commerce, real estate, government, finance, insurance, and government sectors are the major contributors to the data center market in North America. The South Eastern US dominates the market. The Western US and South Western US witnessed strong growth in the investment in 2019. In 2019, Canada witnessed two major acquisition deals, which include Compass Data Center’s acquisition of Root Data Center and Cologix’s acquisition of Colo-D. These acquisitions are likely to boost the Canadian data center market.

The data center market in Western Europe is witnessing investment from both global and colocation service providers. The GDPR has driven the demand for data center development among colocation and cloud services providers. The demand for smart devices, coupled with growing internet penetration, will also fuel the data center market growth and corresponding infrastructure in the region. The facilities in Western Europe are increasingly being built to support OCP rack infrastructure solutions. This is aided by the growth of ODM solutions in the market. Investments in facilities across the UK, the Netherlands, Germany, France, and Ireland are growing majorly driven by colocation service providers and hyperscale cloud service providers. Among colocation investment, Equinix invested in five new facility expansion projects with an investment of around $300 million in the UK. In terms of power capacity, Germany led the Western Europe market with around 25% market share, followed by the UK and the Netherlands in 2019. Hyperscale operators such as Facebook, Apple, Microsoft, Google, and AWS have been significant contributors to the growth of the ODM market share across Western Europe.

The major drivers in the APAC market are the growing number of internet users, the increased use of social media, elevated smartphone penetration, the increased adoption of public cloud and hybrid cloud services, and the need for enterprises to migrate from the server room environment to data centers. The market in APAC is witnessing steady growth with continued investments from hyperscale and cloud service providers such as AWS, Microsoft, Google, and Alibaba. China, India, Australia, Japan, Singapore, and Hong Kong are the leading markets in the region. Several operators are continuing to buy land for the facility development in APAC. This includes providers such as SUNeVision (Hong Kong), Digital Realty MC (Japan), Airtel (India), Yotta (India), ST Telemedia (Singapore/Indonesia/Hong Kong). Hyperscale providers are building data centers as well as colocating wholesale spaces in the region. Multiple global SaaS providers are entering the market in the APAC region by constructing facilities or colocating with the above-mentioned service providers. With the construction of additional facilities, local colocation providers are also increasing their presence, thus boosting the market growth. 

Key Countries

  • North America 
    • US
    • Canada
  • Latin America
    • Brazil
    • Other Countries
  • Western Europe
    • UK
    • Germany
    • France
    • Netherlands
    • Ireland
    • Other Countries
  • Nordic Region
    • 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
    • Morocco
    • Other African Countries
  • APAC
  • China & Hong Kong
  • Australia and New Zealand
  • India
  • Japan
  • Rest of APAC
  • Southeast Asia
    • Singapore
    • Malaysia
    • Thailand
    • Indonesia
    • Other Southeastern Countries

Key Vendor Analysis

Dell Technologies is the leading vendor in the server market with a share of 24%. The storage market is migrating actively toward all-flash storage solutions. The all-flash storage market is estimated to grow at a CAGR of over 10% during the forecast period. Dell Technology is the leading vendor in the storage market, followed by HPE and NetApp. In terms of network infrastructure, Cisco is the leading vendor in the market with a share of around 40% share. Its revenue growth was aided by the strong demand for its Application Centric Infrastructure (ACI) product portfolio. The data center market by electrical infrastructure has become highly competitive due to the increased interest shown by operators in procuring energy-efficient infrastructure solutions.

In developing countries, partnerships with local service providers and resellers, along with modular solution providers, will enhance revenues for vendors. Globally, a single mega data center project contract would contribute significantly to the revenue of infrastructure providers under their respective operating segments. Innovations in power infrastructure are driving the competition among vendors. For instance, vendors such as Schneider Electric, Rittal, HPE, Delta Power Solutions, and Huawei provide infrastructure based on the OCP design. In terms of cooling, the competition between liquid-immersion and direct-to-chip cooling manufacturers will intensify owing to the increased deployment of artificial intelligence and machine learning workloads.

The data center market comprises several construction contractors, architectural and engineering firms, physical security vendors, and DCIM solutions providers. Owing to the growing construction in hyperscale facility development, the competition to attain high capital construction contracts among contractors will continue to intensify. Several colocation facilities are being built with multiple data halls, where infrastructure adoption, installation, and commissioning of infrastructure are carried out on an on-demand basis.

Key Data Center Critical (IT) Infrastructure Providers

  • Hewlett Packard Enterprise (HPE)
  • Cisco
  • Dell Technologies
  • Huawei
  • IBM
  • Inspur

Key Data Center Support Infrastructure Providers

  • ABB
  • Eaton
  • Rittal
  • Schneider Electric
  • STULZ
  • Vertiv
  • Caterpillar
  • Cummins

Key Data Center Contractors

  • AECOM
  • Bouygues
  • DPR Construction
  • Holder Construction
  • Jacobs Engineering
  • Mercury Engineering
  • M+W Group

Key Data Center Investors

  • Apple
  • AWS (Amazon Web Services)
  • CyrusOne
  • Digital Realty
  • Equinix
  • Facebook
  • GDS Holdings
  • Google
  • Interxion
  • Microsoft
  • NTT Communications

Other Prominent Critical (IT) Infrastructure Providers – Arista, Atos, Broadcom, Extreme Network, Hitachi Vantara, Inventec, Juniper, Lenovo, NEC, NetApp, Oracle, Pure Storage, Quanta Cloud Technology (Quanta Computer), Super Micro Computer, and Wistron (Wiwynn)

Other Prominent Support Infrastructure Providers – Airedale Air Conditioning, Alfa Laval, Altima Technologies, Asetek Bosch Security Systems (Robert Bosch), Condair Group, Delta Group, Euro-Diesel (KINOLT), Green Revolution Cooling (GRC), Hitech Power Protection, KOHLER (SDMO), Legrand, Nlyte Software, Mitsubishi Electric Corporation, MTU On Site Energy(Rolls-Royce Power Systems AG), Socomec, Trane (Ingersoll Rand), and ZincFive

Other Prominent Construction Contractors – Arup Group, Cap Ingelec, Corgan, CSF Group, Faithful+Gould, Fluor Corporation, Fortis, Gensler, Gilbane Building Co., HDR Architecture, ISG, Jones Engineering, Kirby Group Engineering, KKR Investment Group (Aceco TI S.A.), Larsen & Turbo (L&T), Linesight, Mace Group, Morrison Hershfield, Mortenson Construction, Red-Engineering, Structure Tone, Syska Hennessy Group and Winthrop

Other Prominent Data Center Investors - Cologix (COLO-D), Colt Data Centre Services (Colt DCS), Compass Data Centers (Root Data Center), CoreSite Reality, Global Switch, Keppel DC, Quality Technology Services (QTS Realty Trust), ST Telemedia GDC, Vantage Data Center

Key Market Insights Include

The report provides the following insights into the global data center market during the forecast period 2020–2025.

  1. It offers comprehensive insights into current industry trends, forecast, and growth drivers about the data center market.
  2. The report provides the latest analysis of share, growth drivers, challenges, and investment opportunities.
  3. It offers a complete overview of segments and the regional outlook of the data center market.
  4. The study offers a detailed overview of the vendor landscape, competitive analysis, and key strategies to gain competitive advantage.

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