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Hyperscale Data Center Market - Global Outlook and Forecast 2019-2024

(2019 Edition)

SKU : ARZ191106
  • Published on : November 2019

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This market research report on the hyperscale data center market cover market sizing and forecast, market share, industry trends, growth drivers, and vendor analysis. The study includes insights on the segmentation by IT infrastructure (server, storage, and network), electrical infrastructure (uninterruptible power supply (UPS) systems,generators, rack power distribution units (PDU), transfer switches & switchgears, and other), mechanical infrastructure (Cooling systems, racks, and others), general construction (building development, installation and commissioning services building designs, physical security, and Data Center Infrastructure Management (DCIM)), and geography (APAC, MEA, Europe, North America and Latin America).

Market Dynamics

Tax incentives offered by regulatory agencies worldwide are likely to play an important role in the development of hyperscale facilities construction. A majority of development over the past few years has been concentrated in those regions that offer tax incentives. These tax breaks yield high savings for service operators. For instance, Google negotiated a 100%, 15-year sales tax exemption for a $600-million data center in New Albany, Ohio, the US in 2018.

Similarly, Facebook is likely to receive about $150 million through property tax incentives for building a facility in Utah. Tax incentives are being offered to grow the digital economy through multi-million-dollar investments. Many developing countries are looking to allure investors by providing incentives and land for development during the forecast period. Tax incentives, which are a major criterion for the site selection process, help to generate business opportunities for local sub-contractors. Hence, the availability of attractive tax incentives is expected to drive the hyperscale data center market. 

Snippets 

  • Hyperscale construction in terms of area and power will be high in the US, the UK, Germany, China & Hong Kong, Ireland, Brazil, Canada, the Netherlands, Singapore, Japan, South Korea, Australia, India, France, Denmark, Sweden, and Norway. 
  • Over 25 submarine cable projects are under construction, which will be a major boost for data center development in developing countries.
  • The increasing adoption of SSDs by hyperscale operators will decline the price of the drive and increase the capacity. 
  • The adoption of 2N power infrastructure will grow among hyperscale facilities, facilitated by flexible design.
  • Data center operators will consider reducing the energy consumption of cooling units in the facility by adopting innovative cooling solutions such as free cooling, water-less cooling systems, and direct liquid cooling techniques. 
  • The demand for hyper-converged platforms will be high among hyperscale operators with more interest shown on open source infrastructure solutions.

 The global hyperscale data center market is expected to grow at a CAGR of over 9% during the period 2018–2024. 

Hyperscale Data Center Market: Segmentation

This research report includes detailed segmentation by IT infrastructure, electrical infrastructure, mechanical infrastructure, general construction, and geography.

 

Insights by IT Infrastructure

The demand for servers in the cloud environment is likely to grow during the forecast as service providers are expanding their presence globally. The server market is expected to witness demand for servers with multicore processors. Storage capacity will grow as the average number of virtual machines per physical server continues to grow. The US is likely to witness growth in the server segment and shipment is projected to increase during the forecast period.

The growing internet penetration is leading to the growth of hyperscale data center services. It is also leading to the rise in storage infrastructure among enterprises that operate via cloud platforms. The demand for data storage has been dominated by the digital content segment such as video and audio and the graphical content segment, such as virtual and augmented reality in the last decade, and it is expected to grow during the forecast period.

Insights by Electrical Infrastructure

The use of Lithium-ion UPS systems will continue to grow among hyperscale data center operators during the forecast period. Vendors are continually innovating their UPS solutions to increase efficiency and reduce cost. Diesel generators are likely to witness growth in the US. However, gas and bi-fuel generators are expected to witness steady growth due to the increased awareness of carbon emissions, especially in the US. The adoption of switchgears will grow because of the increased construction of large and mega facilities that require medium and high-voltage switchgears. The adoption of basic rack PDUs is expected to decline with the higher adoption of metered, monitored, switched, and metered-by outlet PDUs.

Insights by Mechanical Infrastructure

The use of indirect evaporative cooler and air/water-side economizers is likely to continue as most hyperscale facilities are being developed in countries that experience cold climate for more than 4,000 hours per year. The facilities in Southeast Asia, China, India, the Middle East, Africa, and Latin America are likely to prefer chilled water systems.

Racks with 45U­–48U configuration are gaining popularity among hyperscale operators. In the hyperscale market, the use of open rack architecture released by Open Compute Projects comprising 48U rack configuration is expected to witness traction.  The increased use of converged infrastructure in hyperscale data centers will have an impact on the rack market. Constantly innovations in rack designs increase airflow perforation, enhance cabling channels, and increase weight capacity.

Insights by General Construction

A majority of the existing development in the US is being carried in locations that offer free cooling of a minimum of 4,000 hours. The facilities established in the South Western US are incorporated with energy-efficient water-based cooling systems, with on-site water treatment plants saving a minimum of 30% of water consumed. In the US, a majority of states provide tax incentives for data centers; also, they provide job-based tax incentives.

The growing hyperscale construction will be a major boost to contractors and sub-contractors operating in the market.  Most projects established in MEA are of greenfield development type. The labor cost is high in the Middle East due to the availability of a skilled workforce. However, the labor cost in Africa is low, with the growing need for skilled professionals as construction activities increase. The use of renewable energy such as solar panels will grow across the region because of the extreme climatic conditions.  In terms of general construction, China is leading in the greenfield construction of data centers in APAC. China has strong landmass and favorable climatic conditions to develop multiple hyperscale facilities across the country. Beijing and Shanghai are the leading hubs for data center operations. However, it is expected that most hyperscale development will be carried out in rural areas during the forecast period.

Geographical Insights 

In the Americas region, the US is the primary market for hyperscale data center development due to high investments from the cloud, internet, and wholesale colocation service providers. Canada is witnessing an increased growth from global colocation and cloud service providers. The growth in Latin America is largely dependent on the strength of internet connectivity in the continent. There will be a large investment by hyperscale developers, and the high adoption of modular facilities is likely to boost the Latin America market during the forecast period.

The hyperscale data center market in EMEA is expected to reach over $6 billion by 2024. The increase in internet and smartphone penetration and the improvement in broadband connectivity are aiding the growth. The Middle Eastern government’s well-defined policies along with attractive tax incentives, will bring multiple FDIs to the region during the forecast period. Africa is expected to witness multiple foreign investments during the forecast period. Investments for improving broadband connectivity are significantly growing in the region. Most submarine projects are connecting Africa with Middle Eastern countries with Europe and Asia.

The hyperscale data center market in APAC is witnessing steady growth with continued investments from colocation and cloud service providers such as AWS, Microsoft, Google, and Alibaba. There are also multiple global SaaS providers entering the market in the APAC region by constructing facilities or colocating with the above-mentioned service providers.

Key Regions and Countries Profiled:

  • US
  • Canada
  • Latin America
  • Western Europe
  • Nordic
  • Middle East and Africa
  • China & Hong Kong
  • Australia & New Zealand
  • India
  • Southeast Asia
  • Rest of APAC 

Key Vendor Analysis

The competition in cloud service providers to establish multiple cloud regions and increase the customer base for their service offerings is increasing the investment in hyperscale facilities construction. The market for infrastructure suppliers is becoming competitive YOY. Infrastructure suppliers are continuously innovating their product portfolio to increase their revenue shares. The competition will be high in infrastructure providers supplying mission-critical and high-performance infrastructure solutions. Schneider Electric, Eaton, Vertiv, and ABB are leading the electrical infrastructure market. Cummins, Caterpillar, and MTU On Site Energy have a strong presence in the generator market.

Key Company Profiles

  • Apple
  • Amazon Web Services (AWS)
  • Alibaba
  • Facebook
  • Google
  • Microsoft
  • NTT Communications
  • OVH
  • Tencent

 Other Prominent Vendors  Aligned Energy, Ascenty, Canberra Data Centers, Chayora, COPT Data Center Solutions, CyrusOne, Data Foundry, Digital Realty, EdgeConnex, EdgeCore, Equinix, Fujitsu, GDS Services, GIGA Data Centers, Global Switch, Reliance Communications, Sabey Data Center, Scaleway Datacenter (Iliad Data Center), STT GDC (VIRTUS), Telia Company (TeliaSonera), T-Systems, VADS Berhad, and Vantage Data Centers

 Key Market Insights Include

The report provides the following insights into the hyperscale data center market for the forecast period 2019–2024.

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

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