Why Is Colocation So Hot Right Now?

In the past couple of years, colocation has gone from a term that many business leaders would not likely be able to define, to one that is at once high on the priority list and commonly incorporated into the corporate lexicon. This raises the question as to why colocation has become such a commonly sought-after set of solutions among businesses and public sector entities, and one that can be answered by looking at a variety of trends that have gained traction of late. 

Simply put, colocation is one of the best answers to some of the connectivity and cost control demands of modern IT management and service delivery, and this relates to everything from big data to the Internet of Things and beyond. However, before diving into the reasons behind the rapid growth of colocation revenues and adoption around the globe, it might be helpful to get some of evidence to back up the claim. 

The Foundation

451 Research recently released its annual report on data center colocation markets, forecasting revenues received by providers are expected to reach roughly $22.8 billion globally this year. The firm pointed out that one consistent fact that might begin to change is that companies are currently relying heavily on local providers, with 74.8 percent of all revenues forecast coming from this market segment. 

"This remains an extremely fragmented industry," Kelly Morgan, North American Data Center research director for the firm, explained. "The majority of colocation facilities are provided by local operators with only one to three facilities each. However, it is becoming harder for them to compete with the more geographically diverse providers that are now entering many local markets. We will see continued consolidation in this sector."

With this in mind, let's take a look at the catalysts driving revenues higher. 

Elasticity, Reliability

Colocation allows companies to become a bit more flexible when it comes to IT service management and delivery, both from the operational and financial standpoints. Think about how the Internet of Things, big data, enterprise mobility and virtually every other trend that has surfaced in the past few years demands this agility and speed, and it should become clear why colocation services are in such high demand. 

In the coming years, it is more likely than not that the colocation market will continue to expand alongside constant innovation in other segments of the IT sector. 

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