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IndustryARC
COLOCATION AND MANAGED HOSTING (CMH) MARKET ANALYSIS (2014 – 2020)
By User Types (Small, Medium, Large and Enterprise); Provider Type (Tier-I, Tier-II, Tier-III and Tier-IV); Verticals (Government, Financial Institutions, IT, Telecommunications)
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Table of Contents 1. Global Colocation Market Overview 2. Executive Summary 3. Global Colocation Market Landscape 3.1. Market Share Analysis 3.2. Comparative Analysis 3.2.1.
Product Benchmarking
3.2.2.
End user profiling
3.2.3.
Patent Analysis
3.2.4.
Top 5 Financials Analysis
4. Global Colocation Market Forces 4.1. Market Drivers 4.2. Market Constraints 4.3. Market Challenges 4.4. Attractiveness of the Colocation Industry 4.4.1.
Power of Suppliers
4.4.2.
Power of Customers
4.4.3.
Threat of New entrants
4.4.4.
Threat of Substitution
4.4.5.
Degree of Competition
5. Global Colocation Market – Strategic Analysis 5.1. Value Chain Analysis 5.2. Pricing Analysis 5.3. Opportunities Analysis
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5.4. Retail Colocation Vs Wholesale Colocation 5.5. Traditional Colocation Vs Managed Colocation 5.6. Managed Hosting Services Market Overview and Revenues Analysis 5.7. DCRE Market Overview and Revenues Analysis 6. Global Colocation Market – By User and Provider Types 6.1. By Tier Types 6.1.1.
Tier 1
6.1.2.
Tier 2
6.1.3.
Tier 3
6.1.4.
Tier 4
6.2. By Business Type
6.2.1.
Small Businesses
6.2.2.
Medium Size Businesses
6.2.3.
Large Businesses
6.2.4.
Enterprise Corporations
7. Global Colocation Market – By End User Verticals 7.1. Telecommunications 7.2. IT Companies 7.3. E-Commerce Companies 7.4. Government 7.5. Financial Institutions 7.6. Others 8. Global Colocation Market – By Solutions 8.1. Power Distribution Units
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8.2. Cooling Systems 8.3. Network Connectivity 8.4. Racks and Enclosures 8.5. Physical and Electronic Security 8.6. Software Services 8.7. Others 9. Global Colocation Market -Geographic Analysis 9.1. Introduction 9.2. Americas 9.2.1.
North America
9.2.2.
Brazil
9.2.3.
Argentina
9.2.4.
Mexico
9.3. Europe 9.3.1.
UK
9.3.2.
France
9.3.3.
Germany
9.4. APAC 9.4.1.
China
9.4.2.
South Korea
9.4.3.
Japan
9.4.4.
Australia
9.5. ROW
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10. Market Entropy 10.1.
New Product Launches
10.2.
M&As, Collaborations, JVs and Partnerships
11. Investment Opportunities – Analysis by Target companies/customers, Capital Investments, ROI, Payback Period and Source of Funds. 12. Company Profiles (Overview, Financials, SWOT Analysis, Developments, Product Portfolio) 12.1.
Equinix
12.2.
Telecity Group
12.3.
Interxion
12.4.
TELEHOUSE
12.5.
Deutsche Telekom
12.6.
NTT
12.7.
Interoute
12.8.
Colt
12.9.
Rackspace
12.10. Peer1 Hosting 12.11. Internap 12.12. Digital Reality Trust 12.13. Level3 Communications 12.14. Savvis Inc 12.15. Terremark 12.16. Navisite
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12.17. IBM 12.18. Windstream 12.19. Sabey Corp 12.20. Cyrusone 13. Appendix 13.1.
Abbreviations
13.2.
Sources
13.3.
Research Methodology
13.4.
Bibliography
13.5.
Compilation of Expert Insights
13.6.
Disclaimer
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1. GLOBAL COLOCATION MARKET OVERVIEW 1.1 REPORT SCOPE This report captures the colocation market and analyzes it by the provider types like Tier-I, Tier-II, Tier-III and Tier-IV data center types, by business user type like small, medium, large and enterprise customers. The colocation market is also segmented by the end user verticals type like government, utility companies, IT companies, telecommunications, ecommerce service providers, banking and financial institutions. Colocation market, similar to data centers market needs a host of software, hardware and other ancillary services to construct expand and offer competitive services to their customers. Hence the market has been segmented by solutions like PDUs, cooling systems, network connectivity, racks and enclosures, physical and electronic security and software services. Competitive landscape for each of the product types is highlighted and market players are profiled with attributes of company overview, financial overview, business strategies, product portfolio and recent developments. Market shares of the key players for 2012 are provided. The prominent players profiled in this report are Equinix, Telecity Group, Telehouse, Interxion and others. Top private competitors with positions in both managed hosting and cloud services include Layered Tech, Softlayer, and SunGard, the global leader in disaster recovery. Other top managed hosters in North America include Peak 10, Hosted Solutions, Carpathia, PEER 1, Q9, Hosting.com, ViaWest, and Verio (owned by NTT Communications). In Europe the key players include Host Europe, Claranet, and Belgacom. Top public competitors include AT&T, Time Warner Cable/NaviSite, CenturyLink/Savvis, Cable & Wireless, Orange Business, and Verizon Business/Terremark. The report contains the most detailed and in-depth segmentation of the global colocation centers market.
1.2 STAKEHOLDERS IT Providers, Cloud service providers, server OEMs, enclosure companies, cooling systems providers, collocation services, hosting service providers, service providers, DCIM companies, UPS and PDU companies are the key stakeholders in this market. DCRE companies, colocation service providers, colocation cloud service providers, managed hosting, hybrid hosting service providers.
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2. EXECUTIVE SUMMARY Colocation centers can be considered as data center which is a mixture of cloud or hybrid cloud services and hosting servers on their own by customers. In this concept, the colocation service provider offers physical space, power, cooling, connectivity etc and the customer uses them to host their own servers, software. This kind of model offers security, lower operating costs and zero infrastructure costs. Colocation centers are generally divided into retail colocation and wholesale colocation, the major difference between the two being the size of space offered for rental purposes. Wholesale colocation gives an entire floor (more than 10,000 Sq.ft) compared to retail colocation which has rental plans like unit-wise colocation, quarter rack, half rack and full rack colocation etc. Colocation is a very cost effective plan for small and medium businesses because of the following advantages: •
Zero infrastructure building costs and minimal operating costs.
•
Servers and IT infrastructure is owned by the customer and hence data security, software for operation purposes are easy to control, maintain and monitor.
•
It helps companies to expand to multiple locations and lease space rather than build new data centers. This is especially significant for e-commerce companies and other online service providers for which proximity to customer ensures speed and better service.
•
Costs of hiring IT personnel are removed.
Historically, speaking power wise, retail colocation customer needs are catered to under the 500kW capacity range whereas wholesale colocation customers typically need more than 1 megawatt of power capacity.
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Global Colocation Market Revenues, By Geographic Region (%), 2014
Source: IndustryARC Analysis The global CMH market had revenues of around $38bn in 2012 and is expected to reach $77bn by 2018.
GLOBAL CMH MARKET REVENUES ($BN) AND YOY (%), 2011 – 2018 Market
2011
2012
2013
2014
2015
2016
2017
2018
Colocation and 28.4 Managed Hosting ($bn) YOY (%) Xx% Source: IndustryARC Analysis
33.6
38.3
XX
XX
XX
XX
77.5
CAGR % (2013 2018) 18%
18%
14%
Xx%
Xx%
Xx%
Xx%
Xx%
Xx%
This market is a sum of DCRE (Data Center Real Estate), colocation/interconnection services, managed hosting market and cloud services provided by managed hosting companies market.
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GLOBAL COLOCATION MARKET REVENUES ($BILLIONS), 2011 – 2018
Source: IndustryARC Analysis
The colocation market is growing at a CAGR of around 16% during 2013 – 2018 and is expected to increase from around $22.5bn in 2013 to reach $47.2bn in 2018. The above figure illustrates the revenue growth of the market during 2011 – 2018.
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The colocation cloud services market is around $4bn currently and is growing at around 60% YoY, the fastest of the 4 different segments in the global CMH market. Colocation Solutions
2011
2012
2013
2014
2015
2016
2017
2018
Power Distribution Units Cooling Systems Network Connectivity Racks and Enclosures Physical and Electronic Security Software Services Others
xx
xx
xx
xx
xx
xx
xx
xx
CAGR % (2013 2018) xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
xx xx xx xx
14% 8% xx 21%
xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
The table above shows the market growth rates, market revenues for the period 2011 -2018 in the colocation solutions market. Physical and electronic security is the fastest growing segment, followed by cooling systems and racks/enclosures segment.
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KEY MARKET INSIGHTS Equinix has been expanding its presence internationally, including Asia Pacific, Brazil, and Europe via the acquisitions of Asia Tone, ALOG, and ancotel and its own investments in new data centers. NTT purchased an 85% stake in UK-provider Gyron and Telecity acquired Finland operator Tenue Oy. The global colocation market is consolidating fast and is leading to a competitive landscape with stable rates and higher investments. Retail colocation accounts for 73% of market revenues and the remaining 27% coming from wholesale colocation in the overall colocation market. However wholesale growth is higher than retail colocation, considering the cost per tenancy deal and profit margins are higher. Wholesale colocation providers are reducing their size requirements and pricings to compete with retail colocation providers. This is leading to the emergence of a new “wholo” market, which is a mix of wholesale and retail colocation best points. Average prices of colocation are higher in Europe compared to the US due to higher investment and operational costs. Current market price lies in the range of $190 to $220 per kilowatt per month gross. The Asia Pacific market on the other hand, though having a higher internet users and demand, is currently underserved and has market prices in the range of $240-$360 per kilowatt per month gross. Wholesale rates are in the range of around $140-$160 per kilowatt per month, with retail colocation costs 1.7 to 2.2 times the wholesale prices globally.
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RESEARCH METHODOLOGY The quantitative and qualitative data collected for the colocation centers market report is from a combination of secondary and primary sources. Research interviews were conducted with senior executives and/or managers of leading colocation service providers. These Key Opinion Leaders (KOLs) were then provided a questionnaire to gather quantitative and qualitative inputs on their operations, performance, strategies and views on the overall market, including key developments and technology trends. Data from interviews is consolidated, checked for consistency and accuracy, and the final market numbers are again validated by experts. The global market was split by industry and geography based on different factors like primary and secondary sources, understanding of the number of companies operating in each segment and also KOL insights. We have used various secondary sources such as directories, articles, white papers, newsletters, annual reports and paid databases such as OneSource, Hoovers and Factiva to identify and collect information for extensive technical and commercial study of the colocation centers market. The key players in the market and its value chain were identified through secondary research and their market opinions were also gathered in a similar way through telephonic interviews and questionnaires. We have also studied the annual reports of these top market players. Interviews with key opinion leaders such as directors, managers, marketing personnel were used extensively in understanding the need and emergence of colocation centers and services market.
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THE ARC ADVANTAGE An analytical model lies at the core of our process, ensuring logical consistency throughout our research. We complement the model with secondary data and interviews with industry experts to reflect the latest trends. With our final expert validation, we provide you with only the most accurate and actionable intelligence.
THE ARC PROCESS Analytical Method 1. Granular breakdown of drivers into factors 2. Validate all factors in terms of their present impact on the market 3. Assign weights to these factors in terms of their relevance and impact on the market 4. Build the Analytical Model ANALYTICAL MODEL
Base Method
1. Get a topdown estimate of the market 2. Follow it up with a bottom-up estimate of the market 3. Check forconsistency and new growth factors that are relevant over the next 10 Years
4. Build the Base model BASE MODEL
Consolidation Method 1. Granular breakdown of drivers into factors 2. Validate all factors in terms of their present impact on the market. 3. Assign weights to these factors in terms of their relevance and impact on the market. 4. Build the Consolidated Model
Delphi Verification 1. Verify the findings of the model with experts from across the value chain 2. Verify the findings with players across small and large enterprises 3. Tweak the model and add new factors 4. Finalize the ARC Model
CONSOLIDATED MODEL
ARC MODEL
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