European Data Center Colocation Market: Analysis By Type, By Enterprise Size, By End-Use, By Region Size and Trends with Impact of COVID-19 and Forecast up to 2027

The European data center colocation market in 2021 was valued at US$14.03 billion. The market is expected to reach US$29.37 billion by 2027. The process of renting a large amount of physical space, internet bandwidth, and network by a service provider within an existing data center to deploy the service provider's own data center to store massive amounts of data and manage server operations for large businesses is known as data center colocation.

Additionally, the adoption of cloud-based services by enterprises and social media by consumers are driving the construction of hyperscale data centers in Europe by companies such as Facebook, Google, Amazon Web Services (AWS), and Microsoft. Therefore, the growing adoption of cloud services in Europe is predicted to help in the expansion of data center colocation market in the forthcoming years. The market is expected to grow at a CAGR of approx. 13.1% during the forecasted period of 2022-2027.

Market Segmentation Analysis:

• By Type: The report provides the bifurcation of the market into two segments based on the type: Retail Colocation and Wholesale Colocation. In 2021, retail colocation held a major share in the market. The segment is expected to grow at the highest CAGR in the forthcoming years as it offers flexibility in terms of IT infrastructure, which benefits small and medium-sized enterprises (SMEs), which increase its market share in the colocation of data centers across the region.
• By Enterprise Size: The report further provides the segmentation based on the enterprise size: Large Enterprises and Small and Medium Enterprises (SMEs). The large enterprises held the highest share in the market. The market's expansion is aided by the growing adoption of colocation services among major cloud service providers and hyperscalers in the region.
• By End-Use: The report further provides the segmentation based on the end-use: IT & Telecom, BSFI, Healthcare, Retail and Others. The IT & Telecom held the majority share in the market on account of rising demand for additional data storage capacity as a result of increased adoption of smartphones, laptops, tablets, gaming consoles, and other gadgets and benefits provided by data center colocation providers to the IT industry such as speed of deployment, waste and energy efficiency, and scalability.
• By Region: The report provides insight into the data center colocation market based on the regions namely Germany, the UK, France, Russia, Italy, and the Rest of Europe. Germany held the major share in the market owing to digital transformation strategies, the adoption of cloud computing by enterprises, IoT, AI, implementation of GDPR, and COVID-19. The German market is further divided based on type namely, Retail Colocation and Wholesale Colocation.
• In the UK data center industry, London is a major location for investment, with regions like Manchester, Slough, and Birmingham expecting to see significant investment in the years to come.

Market Dynamics:

• Growth Drivers: The European data center colocation market has been growing over the past few years, due to factors such as soaring demand for data center colocation services among small business, surging number of IOT connected devices and big data, rising costs of operating data center, mounting penetration of internet, and many other factors. The expansion of the telecommunications network and the rise in the number of new businesses centered on information technology have led to an increase in the demand for more rapid data processing and storage capacities. This is resulting in the adoption of digital technology and expansion of business operations by several small and medium enterprises (SMEs) across European economies.
• Challenges: However, the market has been confronted with some challenges specifically, dearth of qualified labor, high initial and maintenance costs, etc.
• Trends: The market is projected to grow at a fast pace during the forecast period, due to various latest trends such as growing execution of artificial intelligence, increasing adoption of cloud services, expansion of IT and telecommunications industry, etc. The adoption of cloud-based services by enterprises and social media by consumers are driving the construction of hyperscale data centers in Europe by companies such as Facebook, Google, Amazon Web Services (AWS), and Microsoft. Therefore, the growing adoption of cloud services in Europe is predicted to help in the expansion of data center colocation market in the forthcoming years.

Impact Analysis of COVID-19 and Way Forward:

Data center colocation market has benefited from the pandemic as data center colocation technologies help enterprises manage the rising needs of internet traffic. The demand for data centers grew significantly due to the pandemic and subsequent lockdowns across Europe, with a majority of the region's workforce shifting to remote working. In addition, companies from various industries came with more data space requirements to deploy their operations digitally on virtual space during the pandemic. The demand for colocation services led to strong utilization of existing data center space and drove revenues of service providers by over 10% in the initial two quarters.

Competitive Landscape:

The European data center colocation market is highly fragmented, with significant players in end-user industries maintaining their data centers due to the ease of managing an IT staff and many other customizations.

The key players in the European data center colocation market are:

• Equinix, Inc.
• Verizon Partner Solutions
• AT&T Inc. (AT&T Intellectual Property)
• Cisco Systems, Inc.
• Iron Mountain Incorporated
• Digital Realty Trust, Inc.
• NTT Communications Corporation
• Cyxtera Technologies Inc.
• CyrusOne, Inc.
• Global Switch Limited
• Telehouse International Corporation of Europe Ltd.
• Verne Global
• AtNorth

Some of the strategies among key players in the market for data center colocations are mergers, acquisitions, and collaborations. For instance, in April 2022, NTT Ltd announced significant advancements to its Managed Campus Networks service, a portfolio of consulting, technical, and managed services designed to deliver a seamlessly integrated campus network in the most demanding head office, branch, and manufacturing environments. In February 2022, Equinix Inc., had inaugurated MU4, a brand-new International Business Exchange (IBX) building, at Dywidagstrasse 10 in Aschheim. More than 2,250 square meters (24,200 square feet) of colocation space and more than 825 cabinets are available in the first phases of MU4.