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The major colocation players continue to extend their leadership – and comfortably beat overall market growth – in large part due to significant acquisitions, according to the latest note from Synergy Research.
According to the firm’s Q1 2016 figures, the top three vendors in the space remain Equinix, Digital Realty, and NTT, with 28%, 26%, and 41% year on year growth respectively. Yet while the analyst house argues the three firms grew well enough organically, the acquisitions made – in particular Equinix acquiring Telecity and Bit-isle, Digital Reality with Telx and NTT with e-shelter – helped boost the coffers further.
Equinix is the only single colocation player with more than 10% market share, according to the researchers; to put this into context, the remaining seven vendors in the top 10, including CenturyLink, Global Switch, and KDDI, hold just over 15% share between them. According to the data the colocation market is expanding steadily across all regions, with China, Germany, and Japan the highest growing countries in Q1.
Regardless, it shows the market in comparatively rude health. “We’ve seen a constant stream of M&A activity over the past five years and several more big deals are in the pipeline – and yet there remains a very long tail of independent small to medium sized colocation operators,” said John Dinsdale, a chief analyst and research director at Synergy. “Many of these will continue to operate successfully by focusing on specific metros or countries, while others will inevitably succumb to market consolidation,” he added.
451 Research conducted a similar study back in April which argued that 2015 was the best year on record for deals in the data centre, hosting, and managed services sector. Global colocation revenues will reach more than $33 billion (£23bn) by 2018, the researchers argued, with Equinix leading on market share despite Digital Realty owning more real estate.
Anyone asking why the colocation market continues to see market growth needs to look no further than Logicworks’ description in this publication back in February. “As enterprises begin to move ‘easy’ workloads to AWS [et al], they want to move not-ready workloads to a managed environment outside their internal data centres,” Logicworks argues. “Somewhat paradoxically, colocation is rising in popularity precisely because enterprises want cloud.”