Data center industry dynamics

While interest around data center services (DCS) is extremely high, the market structure, dynamics and maturity differ across the world, according to Gartner. The shift toward industrialized services, such as infrastructure utility services (IUS), cloud computing infrastructure as a service (IaaS) and platform as a service (PaaS) is a global trend in the data center services market.

“Many events have affected the DCS market in the past two years, with symptoms of a traditional market at the tipping point from maturity to reinvention or decline,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. “Buyers in enterprise organizations must recognize the common usage patterns and differentiated levels of adoption of hosting vs. data center outsourcing (DCO), as well as the different business and market drivers toward new products.”

In North America, hosting (42 percent) and cloud IaaS have achieved the highest level of client adoption, while the markets in the rest of the world are dominated by data center outsourcing (80 percent).

Other drivers across the global markets are economic growth and the buying trends of small or midsize businesses (SMBs). Combined, these factors cause the DCS market to evolve at a different rate toward the new delivery models in the macro geographies.

North America

Data center outsourcing (DCO) in North America was $33 billion in 2011, while Web hosting and colocation were $23 billion. This market has the highest cloud adoption rate, with 60 percent of public cloud services worldwide, and the U.S. hosting market has continued to accelerate the pace of innovation and transformation.

The North American DCO/IUS market has grown both organically and through new offerings, such as storage as a service. Traditional DCO services growth continues at a slower pace than previously, due to IUS solutions and lower-price IT outsourcing (ITO) industrialized models.

Europe

DCO in Europe was $38 billion in 2011, while Web hosting and co-location were $8.6 billion and public cloud services adoption 22.9 percent. The European market used to be a fragmented puzzle of different and relatively small country markets, but since 2005 leading outsourcers have implemented low-cost remote control centers and then started developing IUS offerings to benefit from significant traction with infrastructure utility for SAP, particularly since 2008 and during the economic crisis.

Asia/Pacific

DCS in the region was $10 billion in 2011, while Web hosting and co-location were $2.5 billion, and public cloud services penetration was 9.8 percent in Japan and 3 percent elsewhere. Japan and South Korea are the most vibrant Web hosting markets for local content, while Singapore and Hong Kong are important regional hubs for multinationals. Other developed markets include Australia, New Zealand and Taiwan.

A few large infrastructure vendors dominate the DCO market in the region, while regional and local providers operate in each country. A plethora of players, such as IT services providers, hosters and cloud specialists (from the U.S.) have recently joined the race, with more expecting to fill the marketplace in the next 12 months.