DATA CENTER COLOCATION MARKET ANALYSIS

Market Concentration and Competitive Landscape

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Rise of edge computing and the need for regional presence

Edge computing is emerging as the next big thing in the IT industry as more applications and workloads require ultra-low latency connectivity. With edge, the goal is to process data as close to its source as possible in order to achieve single-digit millisecond response times compared to multiple seconds on the public internet. This makes edge computing highly suitable for use cases such as autonomous vehicles, telemedicine, augmented/virtual reality, and smart manufacturing among others.

To gain an edge computing foothold, many large cloud and internet firms are deploying regional edge nodes inside third-party data centers, telecom towers, and even retail stores. They seek to establish a local presence in major metro areas worldwide to reduce distance between end users and application logic. Colocation facilities play a crucial role here by providing these firms infrastructure slots near user populations with carrier-neutral connectivity to all the major networks.

Rather than laying their own fiber, companies can leverage the existing network fabric at colocation sites which often span extensive on-ramps to the public internet as well as private interconnections. Edge resources are also outsourced to colocation providers as they offer low entry barriers through flexible lease terms and scale-out modules suited for distributed edge nodes. This has enabled the rapid expansion of multi-access edge computing infrastructure critical for next-gen low-latency applications. Overall, the rise of edge computing is driving increased infrastructure footprint at regional colocation hubs.