Data center gear will increasingly move off-premises

Cloud and colocation sites will account for half of all data center equipment in just five years, according to 451 Research.

Data center gear will increasingly move off-premises
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I've said that colocation and downsizing in favor of the cloud is happening, and the latest research from 451 Research confirms the trend. More than half of global utilized racks will be located at off-premises facilities, such as cloud and colocation sites, by the end of 2024, the company found.

As companies get out of data center ownership, hardware will move to colocation sites like Equinix and DRT or cloud providers. The result is the total worldwide data center installed-base growth will see a dip of 0.1% CAGR between 2019-2024, according to the report, but overall total capacity in terms of space, power, and racks will continue to shift toward larger data centers.

Enterprises are moving to colocation sites and hyperscale cloud providers such as Amazon Web Services (AWS) and Microsoft Azure for different reasons. AWS and Microsoft tend to base their data centers in remote areas with cheap land and some form of renewable energy, while colocation providers tend to be in big cities. They are popular for edge-computing projects such as internet of things (IoT) implementations and autonomous vehicle data gathering.

Either way, enterprise IT is moving outward and becoming more distributed and less reliant on their own data centers.

"Across all owner types and geographic locations, cloud and service providers are driving expansion, with the hyperscalers representing the tip of the spear," said Greg Zwakman, vice president of market and competitive intelligence at 451 Research, in a statement. "We expect to see a decline in utilized racks across the enterprise, with a mid-single-digit CAGR increase in non-cloud colocation, and cloud and service providers expanding their utilized footprint over 13%."

While all the focus is on large-scale data centers, the report found that server rooms and closets account for nearly 95% of total data centers, but only 23% of total utilized racks in 2019. Anyone who works in a remote office can probably relate to this. And 60% of enterprise data center space is less than 10,000 square feet.

On the flipside, the top six hyperscalers account for 42% of total cloud and service providers' utilized racks in 2019. 451 Research expects that to grow at an 18% CAGR, reaching 50.4% by 2024.

So, the trend is rather clear: Owning your own gear is optional, and owning your data center is increasingly falling out of favor.

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