While slowing to single-digit growth, down from 10.6% in 2Q19, the colocation market continues to expand as colocation vendors address the shifting needs of enterprise and hyperscale vendors. According to TBR estimates, benchmarked vendors’ average data center services and colocation revenue increased 8.1% year-to-year in 4Q19 to an aggregate of $3.4 billion. Moving forward, TBR expects incumbents and smaller players alike to continue driving expansion initiatives, particularly in the U.S. Even Japan-based NTT Communications is moving its overseas subsidiaries to become part of NTT Ltd. to better capitalize on market opportunity abroad.
Colocation has long been an option for the data center space, but the market is taking on greater importance amid recent IT trends. Rising demand for cloud environments, specifically hybrid models, pushes leading hyperscalers and the modern enterprise to seek out co-located facilities and the managed services vendors have to offer. TBR’s Colocation Benchmark covers the financial performance of leading providers in this space and tracks their business strategies across core colocation markets and for complementary data center services.