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How Co-Location Providers Succeed in a Cloud-Dominated World

  • March 2015
  • -
  • Frost & Sullivan
  • -
  • 13 pages

Summary

Table of Contents

In this SPIE, Stratecast examines the co-location market opportunity from the perspective of a select category of co-location providers.

Introduction

In the data center services market, co-location appears to be a sleepy throwback to an earlier era. Co-location services are not sexy, like cloud services. They are not on-trend, like managed services. In fact, it seems that some service providers continue to offer co-lo in their portfolios simply as a courtesy to a shrinking base of conservative, technology-lagging customers—just as an Internet service provider may continue to offer dial-up access for grandma.

The perceptions appear to be borne out by enterprise trends. As enterprises increasingly seek to shift their budget from capital to operating; as they decrease their
dependence on inflexible hardware to attain agility; as they outsource routine infrastructure tasks to third-party providers, it seems anachronistic to cling to a model that
still requires the enterprise to invest capital in hardware, which it then must deploy and maintain. One would expect co-lo providers to see the writing on the wall, and build up their portfolios of higher-value cloud services, which promise greater flexibility and budgetfriendliness to customers.

Indeed, many co-lo providers have done so. Yet, a few are bucking the trend. Such pure-play colocation service providers have chosen to focus exclusively on providing space, power, and network interconnections to enterprises and, increasingly, service providers. In doing so, they are helping to provide the infrastructure foundation that supports the growing demand for compute and storage resources, as well as necessary connectivity.

In this SPIE, Stratecast examines the co-location market opportunity from the perspective of a select category of co-location providers. We are considering only “retail” co-location providers, which lease space by the room, cage, or rack; and are not considering “wholesale” providers or real estate investment trusts, such as Digital Realty Trust or Dupont Fabros, which primarily provide large-scale raw data center space. We have also excluded co-location providers that have added managed or cloud services to their portfolios. Instead, we focus only on providers that are betting their company’s future on continued demand for co-location services.

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