What Colocation Trends to Watch for in 2022



Colocation facilities play a critical role in today’s data center industry. Enterprises don’t have to create data centers on-site in office buildings, manufacturing facilities or other business locations. Instead, they can take advantage of a space optimized for their data center infrastructure. 

The global data center colocation market was valued at $44.42 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 13.3 percent from 2021 to 2028. That impressive level of growth will be marked by some trends that are shaping the industry more broadly. 

Prepare for these colocation trends in 2022 and beyond:

1. IoT, data generation and distributed workforce models will drive the demand for edge computing.

Edge use cases are a driving factor in growing the colocation data center market, so it makes sense that colo providers are responding to make the most of this trend. We anticipate seeing this edge colocation trend continue because 5G is expected to push the development of Internet-of-Things (IoT) and smart devices into overdrive. 

In 2020, the number of IoT connections surpassed non-IoT connections for the first time, and experts predict there will be more than 30 billion IoT connections globally by 2025. That’s nearly four IoT-connected devices per person! This prevalence of smart devices calls for colo facilities at the edge to minimize latency issues in real-time processing.

Beyond IoT devices, the sheer volume of data generated today calls for an increase in edge computing. Data generation of any type at the edge benefits from nearby data centers.

It’s also worth noting that an increasingly distributed workforce contributes to the need for edge computing and will continue to do so in 2022. Gartner predicts that in 2022, 31 percent of workers globally will work remotely at least part of the time. That percentage is expected to be higher in the U.S., with more than half the workforce engaging in remote work.

2. High-performance computing will take on greater significance.

High-performance computing (HPC) has become increasingly critical in various sectors. HPC is crucial for governments to ensure national security, for the scientific community to create simulations and make calculations, and for businesses to solve complex problems and promote profitability.

In 2020, the HPC market generated total revenue of nearly $24 billion, and that amount is expected to climb to more than $38 billion in 2022.

How does this growing emphasis on HPC relate to the colocation market? Many enterprises recognize that the right colocation provider can offer the space, security, and cooling capabilities needed to host HPC infrastructure. Colo providers should expect more clients to consider how colocation facilities are suited to HPC and cater to this use case to grow their businesses.

3. Exploding hybrid cloud adoption will combine the benefits of public cloud and private cloud colocation.

Hybrid has become the most popular cloud strategy among enterprises today, and this trend is expected to continue. This approach to meeting an enterprise’s computing needs generally combines public and private cloud services to leverage the advantages of each. 

Public cloud offers impressive flexibility and low cost, whereas private cloud offers more control and security. Companies can choose which computing functions to host in which environment, depending on whether public or private cloud is a better fit. 

Colocation can play a crucial role within a hybrid cloud deployment strategy. In fact, a colo facility can be a valuable alternative to on-premises infrastructure for the private cloud piece of the hybrid puzzle. To make the most of this trend, colocation providers need to find ways to add value for enterprises. In doing so, they can encourage enterprises to choose colocation for their private cloud needs rather than keeping this infrastructure on-premises.

Prepare for the Future by Going Modular

Another colocation trend to watch is the move to smarter construction processes. Modular data centers can help colo providers scale to meet demand and deliver what clients need for their data center solution. 

Want to learn more about this approach to data center design and how it compares to traditional builds? Check out our infographic, “Weighing the Costs and the Benefits of a Modular Data Center.”


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