European Data Center Market to Grow by USD 291.7 Billion (2024-2028), with AI-Driven Insights on Impact of Data Protection Regulations - Technavio

NEW YORK, Oct. 4, 2024 /PRNewswire/ -- Report on how AI is redefining market landscape - The Data Center Market in Europe  size is estimated to grow by USD 291.7 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of over 26.9%  during the forecast period. Imposition of data protection regulation is driving market growth, with a trend towards hybrid and multi-cloud environments. However, cyber security issues  poses a challenge - Key market players include Alphabet Inc., Amazon.com Inc., Apple Inc., Cogeco Communications Inc., Colt Technology Services Group Ltd., Data4 Group, Deutsche Telekom AG, Digital Realty Trust Inc., Equinix Inc., Switch Ltd., GTT Communications Inc., International Business Machines Corp., Meta Platforms Inc., Microsoft Corp., NTT Communications Corp., Pulsant Ltd., QTS Realty Trust LLC, SITRONICS JSC, and Verizon.

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Key Market Trends Fueling Growth

In Europe, the data center market has seen a notable trend towards modular data centers in the past five years. These pre-fabricated solutions offer enterprises the flexibility and scalability they need to adapt to changing IT infrastructure demands. Firms like Flexenclosure and Schneider Electric provide modular data center options, catering to clients in Europe and developing markets. Commercial and governmental initiatives are driving the adoption of modular data centers in Europe. The COVID-19 pandemic further highlighted their importance, enabling businesses to quickly deploy these solutions and support remote workforces with minimal disruption. The modular data center industry is poised for growth due to the increasing demand for adaptable and scalable IT infrastructure, as well as the expanding use of edge computing and the Internet of Things (IoT). The market is expected to flourish during the forecast period, as more businesses opt for the flexibility that modular data centers provide.

Europe's data center market is witnessing significant trends, with a focus on renewable energy storage. Stored renewable energy is becoming essential for businesses and individuals to ensure uninterrupted power supply and reduce carbon footprint. Higher prices are driving the adoption of storage technologies like Lithium-ion batteries and long-duration solutions. Hydrogen and green-ammonia energy are also gaining traction as backup power sources. Co-location providers are partnering with renewable-energy plants to improve power efficiency. Cooling systems and computing power are also evolving with chip designs offering higher power density. Customer preferences prioritize cost savings, scalability, and flexibility. Local special circumstances require data processing solutions tailored to specific industries and regions. Digitalization is fueling the demand for edge computing, real-time data processing, and low latency. Autonomous vehicles and decentralized data centers are emerging trends, with data sovereignty regulations adding complexity to the market. Energy sources like geothermal, wave, and solar are being explored to power data center equipment. Overall, the market prioritizes cost savings, scalability, and flexibility while navigating the complexities of renewable energy integration and evolving customer needs. 

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Market Challenges

• In Europe, data centers face a substantial risk of cyberattacks due to the expansion of cloud computing and virtualization in businesses. Cybercriminals find data centers attractive targets, as successful attacks can lead to significant reputational damage and financial losses. The European Union (EU) has taken steps to bolster cybersecurity, requiring data center operators to implement appropriate technical and organizational measures under the GDPR for securing personal data. The EU Cybersecurity Act also established a certification structure to boost trust and confidence in data center services. Notable cyberattacks on data centers underscore the severity of this threat. Continuous attention and investment are essential to mitigate this challenge and prevent hindrance to the European data center market's growth.
• Europe's data center market is experiencing significant growth due to the digital economy and increasing internet penetration. However, hardware-related expenses and IT infrastructure costs pose challenges. Market sizes vary by country, with a top-down approach used for forecasting. Key indicators include level of digitization and IT equipment sales. Investors seek growth capital in real estate, infrastructure, and cloud vendors. Cooling equipment and network capacity are essential for data center operations. Tenants include IT companies, private equity buyers, and hyperscalers like Amazon Web Services and Google Cloud. Leasing terms, operating margins, and acquisitions of facilities by infrastructure investors and co-location companies are common. Energy consumption is a concern, with a shift towards carbon-free energy supplies, renewable energy, and carbon offsets. Sustainability goals require managing intermittency through solar and wind power and fossil-fuel supplies.

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Segment Overview 

This data center market in Europe report extensively covers market segmentation by

1. End-user 
• 1.1 Medium and small enterprises
• 1.2 Large enterprises
2. Component 
• 2.1 IT infrastructure
• 2.2 Power management
• 2.3 Cooling solutions
• 2.4 General construction
• 2.5 Others
3. Geography 
• 3.1 Europe

1.1 Medium and small enterprises-  Data centers have become essential for businesses in Europe as the value of data grows and the digital transformation continues. Medium and small enterprises often lack the resources to build and manage their own data centers. Consequently, they turn to independent data center operators for IT infrastructure solutions. These providers offer various services, including colocation, managed hosting, and cloud computing, tailored to specific business needs. Notable market participants include Digital Realty, Interxion, and Equinix. The competition among these providers is intense, with each striving to attract customers through distinctive offerings. This competition is expected to fuel the expansion of the European data center services market for small and medium-sized enterprises during the forecast period.

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Research Analysis

The European data center market is experiencing significant growth due to increasing customer preferences for digital services, data processing solutions, and the need for businesses and individuals to store and manage large amounts of data. Local special circumstances, such as stringent regulations and energy costs, influence the market's dynamics. Investors, both infrastructure and growth capital, are showing interest in the sector due to its potential for cost savings, scalability, and flexibility. Edge computing is also gaining traction, allowing data processing to occur closer to the source, reducing latency and increasing efficiency. Network capacity and cooling equipment are critical components of data centers, with renewable energy sources, such as wind, solar, geothermal energy, and wave energy, becoming increasingly important for powering data centers sustainably. Data center equipment, including cooling systems and computing power, is also a significant market, with advancements in chip designs and power density playing a key role in improving efficiency and reducing costs.

Market Research Overview

The European data center market is experiencing significant growth due to increasing customer preferences for digitalization and real-time data processing. Businesses and individuals alike are seeking cost savings, scalability, and flexibility through cloud solutions and co-location services. Local special circumstances, such as data processing solutions for autonomous vehicles and decentralized data centers, are driving market expansion. Key market indicators include market sizes, level of digitization, and forecasting techniques like exponential trend smoothing. Investors, including infrastructure investors and private equity buyers, are providing growth capital for new facilities and acquisitions. The market is characterized by the dominance of hyperscalers like Amazon Web Services and Google Cloud, as well as co-location companies and network capacity providers. Facility management, power and connectivity, and cooling equipment are essential components of data center operations. Renewable energy, carbon-free energy supplies, and sustainability goals are becoming increasingly important, with solar power, wind power, and hydrogen emerging as key energy sources. Hardware-related expenses, IT infrastructure, and leasing terms are significant factors in the decision-making process for tenants. Data sovereignty regulations and the digital economy are also shaping the market, with national statistical offices and key market indicators providing valuable insights. The market is expected to continue its exponential trend, with storage technologies, such as lithium-ion battery storage and long-duration solutions, playing a crucial role in addressing intermittency and higher prices.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• End-user
• Medium And Small Enterprises
• Large Enterprises
• Component
• IT Infrastructure
• Power Management
• Cooling Solutions
• General Construction
• Others
• Geography
• Europe

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

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With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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SOURCE Technavio