Colocation is a concept as old as dedicated servers themselves. The fact is, bare metal solutions require dedicated space and experienced technicians. When ideal conditions are necessary to keep your servers running smoothly, why not entrust your hardware to facilities built around their maintenance? By housing your servers in a larger provider’s data center, you not only gain access to premium security, cooling, and the fastest networks possible but a slew of associated financial savings as well. For many organizations, colocation has been a tried and true solution for decades.
But with the rise of public cloud providers like AWS and Azure, has colocating dedicated servers become an outdated infrastructure solution?
Ten years ago, there are many who would have told you “yes.” However, as these early adopters have come to realize, the cloud is not some perfect panacea: for all its perks, its flaws are just as prevalent. The fact is, renting your digital infrastructure on-demand will always be more expensive than owning your servers outright. Even if it doesn’t seem that way when you’re signing the contracts, the fees do eventually add up.
Now, with many early adopters approaching or passing the ten-year mark with their public cloud solutions, market trends are revealing a growing move towards colocation, a resurgence in dedicated bare metal server solutions, and an increasing reliance on hybrid cloud infrastructure.
In this post, we’ll look at some of the evidence supporting the growth of colocation, its projected market potential over the coming years, and why your organization would benefit from a hybrid cloud colocation solution with mxNAP.
Market Trends, Annual Growth, & Projected Totals
Colocation is booming. According to a new report available through ResearchandMarkets.com, the Global Colocation Market is growing at a compound annual growth rate (CAGR) of 12.44%. Assuming this trend continues through 2028, the report predicts global market growth for the colocation industry to rise from roughly 41 billion in 2020 to 101 billion by 2028. Another report from Grand View Research, places these numbers even higher, estimating the current market value for colocation at 44 billion with a 13.3% CAGR.
In other words, in spite of the cloud, reliance on colocation is still growing.
But why? Why are more and more companies moving back to colocation-based solutions for their digital infrastructure?
The fact is, renting your digital infrastructure on-demand will always be more expensive than owning your servers outright.
There are many reasons companies are making the switch to colocation. Whether it’s a desire to reduce public cloud costs and diminish overall reliance, a move towards smaller, greener alternatives to swelling hyperscale data centers, or a need for the location-specific advantages of newer edge facilities, there are many factors contributing to this move away from purely cloud-based solutions.
In the end, the question isn’t, “why are so many companies choosing colocation?”, but rather, “is it time for MY company to consider colocation too?”
There are numerous advantages associated with colocation. In the days of on-premise dedicated servers, the key benefit of colocation was reducing physical space requirements. Instead of building server rooms to house your servers on-site, colocation allows companies to utilize the existing square footage of an established provider. This means you not only save on the costs of building and maintaining server rooms, but it also means that future growth opportunities aren’t limited by a lack of physical space to expand in.
Beyond the issue of space, utilizing the larger facilities of a true data center also translates to price breaks in electricity costs and access to superior networks. Because these facilities move large volumes of data, they wield increased power when negotiating with electricity and networking service providers. This can lead to significant price breaks which are typically transferred along to customers as an incentive for using their services.
