The global data center market is expected to grow at a CAGR of over 2% during the period 2019-2025.
Increased Construction of Hyperscale Data Centers
Growth in the Procurement of Flash for Critical Applications
Adoption of Nickle-Zinc & Lithium-ion Batteries in Data Centers
High Penetration of 200GbE and 400GbE Switch Ports
Increase in Adoption of Hyperconverged and Converged Infrastructure Platform
The data center market is witnessing significant investments from colocation service providers, cloud/hyperscale service providers and telecommunication service providers. Hyperscale data center investment has grown significantly in the past years led by Google, Facebook, AWS, Alibaba, and Microsoft.
The market witnessed investment in over 100 facilities with power capacity of over 15 MW. Telecommunication providers in several countries are investing heavily to grow broadband connectivity worldwide. Moreover, government agencies are fueling the growth of the digital economy in several countries and initiatives toward the development of smart cities will continue to boost the need for edge computing during the forecast period.
The demand for colocation and managed service is growing in the global data center market due to technological advancements across industries. The market witnessed investment in over 300 colocation projects. This includes investments in new facilities as well as expansion projects. Many enterprises in developed countries are migrating to colocation data centers to operate hybrid infrastructure services.
In the US region, colocation service providers are making substantial contributions to hyperscale data center projects. Several colocation service providers investing more than $200 million in new construction and expansions in the data center colocation market worldwide. Colocation service providers are investing in major hyperscale projects in developing countries. China, Australia, Hong Kong, and India are expected to be the major destination for colocation investment in APAC during the forecast period.
Another major factor driving the data center market is the availability of tax incentives, renewable energy sources, and a reliable electricity supply. Over the past few years, data center growth has been concentrated in countries that offer tax incentives.
Several state and local governments provide investment and sales tax incentives based on economic development, where incentives focused on effective facility operations and renewable energy sources procurement that are likely to increase during the forecast period. For instance, in India, state governments in Telangana, Gujarat, Andhra Pradesh, and Maharashtra governments have announced incentives for data center development in 2019.
This research report includes detailed market segmentation by IT infrastructure, electrical infrastructure, mechanical infrastructure, cooling systems, cooling technique, liquid cooling technique, general construction, tier standards, and geography.
The demand for servers will continue to grow during the forecast period as service providers are expanding their presence world over. The demand for servers with multicore processors and memory will grow as the average number of virtual machines per physical server is likely to grow. Enterprise will prefer IT infrastructure that can enable them to reduce space in the data center environment without affecting their performance.
In 2019, the storage systems market was driven by the increased adoption of all-flash storage arrays and hybrid storage arrays. The growth of flash storage systems is aided by high-performance operations that require strong I/O capabilities. The increasing deployment of applications related to big data and AI technology is being supported by all-flash storage systems. Several innovations have surrounded in the network space in the last several decades. 25GbE and 100GbE switches witnessed strong growth in 2019. The increase in the data traffic is increasing the complexity both in the internet and the internal data center network.
The adoption of lithium-ion batteries is likely to significantly increase during the forecast period as their price will continue to decline. It is expected that the contribution from colocation providers will be high in terms of lithium-ion UPS solutions. Generators will continue to grow because of the continuous construction of large and mega facilities across the globe. Many data centers in North America and Europe, where the requirement for generators with higher redundancy is less, are being established and powered by renewable energy sources.
The adoption of Diesel Rotary Uninterruptible Power Supply (DRUPS) systems will continue to witness growth among developing countries. Regions such as Latin America and Southeast Asia are the major revenue generators for DRUPS systems. Although diesel generators are not eco-friendly, their use is important in regions with frequent power outages namely, Latin America, Africa, and parts of Asia. The market for managed/monitored PDUs will witness strong growth during the forecast period.
With the increased data center construction across the globe, the market for transfer switches and switchgears is expected to grow during the forecast period. However, the use of switches will vary significantly based on capacity supported, cost, mean time between failures (MTBF), switching time, and design. In developing countries, modular facility deployments will also include low-voltage switchgears as they are innovate and efficient.
Data centers in Southeast Asia, China, India, Australia, the Middle East, and Africa are likely to prefer chilled water systems or a combination of both air and water-based cooling techniques. Free cooling chillers that facilitate partial cooling using outside air are highly preferred. Service operators are looking for efficient solutions to reduce their CAPEX and OPEX, conserve space, and reduce the power consumption of cooling units. Most modern facilities are being built based on the ASHRAE data center cooling guidelines and the Uptime Institute's tier standards for redundant design.
The increased use of rack scale converged infrastructure systems that support artificial intelligence and machine learning workloads in data centers will have an impact on the rack power density. The OCP rack architecture will witness strong growth along with rack units of over 45U. Vendors are also constantly innovating their rack designs to provide airflow perforation, enhance cabling channels, and support more weight capacity.
With data centers now being built to handle more than 10 MW of IT load, the use of multiple CRAC and CRAH units split across data halls and containment designs is growing. The market will continue to grow that use DX or chilled-water cooling solutions. Data centers are likely to adopt 2N CRAC or CRAH units, whereas other facilities are expected to go for N+N systems. The facilities are now being built with flexible designs, in which additional or high-power capacity units can be incorporated within days or weeks, depending on the customer's requirement.
Several facilities are being developed in the regions such as North America, Western Europe, Eastern Europe, and Nordic, to benefit from free cooling techniques; hence, the adoption of indirect evaporative cooling systems is likely to grow over the next few years. Several modern offerings by vendors include a combination of systems that use cold air outside during winters. The adoption of these systems is mostly focused on reducing electricity by data centers and improving efficiency through reduced PUE i.e. less than 1.5. and carbon emissions.
The data center operators in US, Europe, Nordic, China, Australia, New Zealand, Canada, and Japan are mainly using free cooling solutions. The market is witnessing the increased adoption of evaporative coolers that facilitate partial cooling with indoor CRAC units being used among data centers. Innovations in the free cooling space, especially with the use of outside air for cooling without any on-site water requirement, will continue to grow the market during the forecast period.
Although the growth of liquid-based cooling techniques is higher among direct liquid cooling and immersion cooling solutions, the adoption of chilled water systems is likely to decline over the next few years due to the growing need for cooling solutions that do not require water. The operators are constantly installing on-site water tanks, water treatment, and recycling plants to reduce water consumption. The adoption of free cooling chillers is likely to increase due to the reduction in power consumption by these systems during cold seasons, thereby facilitating the use of outside air for cooling.
The global data center market has a strong presence of general contractors. The competition among general contractors is expected to increase during the forecast period. Expertise in developing facilities in a short period will be key criteria for service operators in the selection of general contractors. Many operators have a strong partnership with general contractors. However, the major challenge for several contractors in the region is the unavailability of skilled workforce to manage multiple hyperscale projects. The importance of physical security will increase in the market, where DCIM adoption will include support from artificial intelligence and machine learning in the market.
With the increasing focus on building highly efficient and reliable data centers, the investment in Tier IV facilities is expected to grow across the globe. Most new facilities are designed as Tier III standards with minimum N+1 redundancy and can be reconfigured with up to 2N redundancy as the demand arises. A majority of under-developed projects across the globe fall under the Tier III category. This trend is likely to continue during the forecast period, with many operators expected to move to the Tier IV category based on the growth in rack power density and critical applications.
In terms of colocation, these facilities will cost more on a per rack basis than the Tier I and Tier II facilities. Most new facilities are designed to be of Tier III standards with a minimum of N+1 redundancy and can be reconfigured with up to 2N+2 redundancy as the need arises, with the incorporation of flexible designs.
Market Segmentation by:
Transfer Switches and Switchgears
Other Electrical Infrastructures
CRAC & CRAH Units
Cooling Towers, Dry Coolers, & Condensers
Other Cooling Units
Others Mechanical Infrastructure
Air-based Cooling Technique
Liquid-based Cooling Technique
Liquid Cooling Technique
Direct-to-chip and Liquid Immersion Cooling
Water-based Cooling Technique
Installation and Commissioning Services
DCIM & BMS
Tier I &II
Key Vendor Analysis
Dell Technologies is the leading vendor in server market with a share of 24%. The storage market is migrating strongly toward all-flash storage solutions. The all-flash storage market is estimated to grow at a CAGR of over 10% during the forecast period. Dell Technology is the leading vendor in the storage market followed by HPE and NetApp. In terms of network infrastructure, Cisco is the leading vendor in the market with a share of around 40% share. Its revenue growth was aided by the strong demand for its Application Centric Infrastructure (ACI) product portfolio. The data center market by electrical infrastructure has become highly competitive due to the increased interest shown by operators in procuring energy-efficient infrastructure solutions.
In developing countries, partnerships with local service providers and resellers, along with modular solution providers, will enhance revenues for vendors. Globally, a single mega data center project contract would contribute significantly to the revenue of infrastructure providers under their respective operating segments. Innovations in power infrastructure are driving the competition among vendors. For instance, vendors such as Schneider Electric, Rittal, HPE, Delta Power Solutions, and Huawei provide infrastructure based on the OCP design. In terms of cooling, the competition between liquid-immersion and direct-to-chip cooling manufacturers will intensify owing to the increased deployment of artificial intelligence and machine learning workloads.
Key Data Center Critical (IT) Infrastructure Providers
Hewlett Packard Enterprise (HPE)
Key Data Center Support Infrastructure Providers
Key Data Center Contractors
Key Data Center Investors
AWS (Amazon Web Services)
Key Market Insights
The report provides the following insights into the global data center market during the forecast period 2020-2025.
It offers comprehensive insights into current industry trends, trend forecast, and growth drivers about the data center market.
The report provides the latest analysis of share, growth drivers, challenges, and investment opportunities.
It offers a complete overview of segments and the regional outlook of the data center market.
The study offers a detailed overview of the vendor landscape, competitive analysis, and key strategies to gain competitive advantage.