Colocation Edge Data Center Market Trends

Growth Drivers

• Growing adoption of 5g networks - 5G technology requires low latency and higher bandwidth for delivering its full potential, as colocation edge data centers are essential for supporting several 5G applications, which can process data locally and reduce backhaul traffic. According to a report, the number of commercial 5G devices has increased by about 51.3% since March 2022. The integration of the next-generation wireless network and the colocation edge data center market is a symbiotic relationship that enhances the capabilities and potential of both technologies as they complement each other to address the demands of modern applications and services.

In addition, 5G technology’s ultra-wideband perfectly matches edge data centers; this combination allows quick data transfer from connected devices to nearby edge data centers, enabling real-time processing and responses.

• Growing adoption of advanced technologies - Over the past few years, the adoption of cutting-edge technologies like cloud computing and data analytics has increased demand for data center colocation services. Players in the colocation edge data center market are utilizing edge solutions to enhance customer support and data management. For instance, the cloud houses 60% of all corporate data worldwide. Global energy consumption is accounted for by cloud data centers at 3%.

The annual revenue from cloud infrastructure services is USD 178 Billion. 90% of major businesses have implemented a multi-cloud infrastructure. Therefore, the BFSI industry's growing integration of cloud-based solutions will increase demand for colocation edge data centers that guarantee quick and instantaneous data transfers.

Challenges

• High-speed network connection in remote areas - As edge data centers are situated close to end-users, data sources, and network access points, there is less distance for data to travel, which lowers the latency between the generation and processing of data. Nevertheless, the absence of a strong network infrastructure in rural areas makes it challenging to build fast connections. As a result, this element can restrict the market for colocation edge data centers' expansion.
• High start-up and maintenance costs may hamper the growth of the colocation edge data center market.
• Concerns over carbon emissions from data centers may hinder the growth of the market.