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Colocation Trends and Future Developments: What Lies Ahead

Colocation Trends and Future Developments: What Lies Ahead

Colocation Trends and Future Developments: With a projected market valuation of $202.71 billion by 2030, we can safely say that the colocation industry is in a rapid growth stage. And this can be credited to various developments, including the changing operational demands since Covid-19 as well as the rollout of 5G.

In this guide, we narrow down the top trends influencing the colocation market in the upcoming future. Keep reading to learn how these changes affect your business operations and the different ways you can benefit from them.

Colocation Trends And Future Developments

1.    5G

The development of 5G will have a significant impact on both businesses and colocation data centers.

For starters, 5G will bring with it the need for higher network capacity and higher bandwidth connections across the market. It will also require network operators to improve their network coverage for every region, especially those with heavy traffic congestion. This can further lead to the need for small-cell installations, which support the expansion of 5G networks.

Although a part of the 5G deployment will be virtual, hardware deployment will also be necessary, along with changes in infrastructure, security, and regulatory systems.

2.    Edge Computing and Cloud Service

The main purpose of introducing edge computing to colocation data centers is to reduce latency while improving connectivity in remote areas. The growing demands for network coverage with the deployment of 5G and the market competition require vendors to put their networks closer to users. This will increase the demand for both edge devices and a network of distributed colocation centers in the future.

The next big development in network operations alongside edge computing is cloud computing. It is a much-anticipated development with mature markets already boasting enormous data center campuses hosting cloud service providers like Google, Microsoft, and Amazon.

While the market for cloud computing is already mature in populated markets, there are lots of emerging markets to explore for vendors.

3.    Hyperscale Computing

There’s a growing demand among public cloud providers, media segments, and other such businesses for colocation providers with hyperscale capacity. This includes a demand for higher capabilities for storage, computing, and security, along with a hybrid combination of features and services, such as more control over data governance.

The rising need to penetrate diverse markets has also led some companies to look for providers that offer non-traditional geographies to add to their network.

4.    Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning (ML) and the technologies that use them are some of the most data-hungry as well as data-generating ones after IoT.

Companies relying on these technologies to run their businesses prefer colocation data centers for their affordability and easy and quick deployment. As the number of businesses using AI or ML increases, the demand for colocation providers will also increase.

Clients will also be looking for vendors that can support large cloud capacities along with new processors and software frameworks for generative AI.

A major benefit of AI and ML for colocation providers is that they have also given data centers the opportunity to boost their operational efficiency. From collecting a huge amount of data for surveillance and security purposes to analyzing that data, vendors can deploy better quality services as the market competition increases.

5.    Sustainability

Climate change is one common threat that all industries need to act upon immediately. The same goes for the data center industry. Thankfully, colocation itself is an energy-efficient improvement on on-premise data centers.

But increasing resistance from communities against data center development and incorporating sustainable practices has become a challenge for colocation providers. Although it also offers an opportunity for providers to stand out from the competition.

From on-site power generation to air-cooled chillers, data centers are now looking for new ways to make their operations energy-efficient. This will help vendors reduce their environmental impact while also passing on those benefits to clients.

Technologies like AI and ML also require higher data center efficiency, which requires high-performance computing devices. Such devices also have higher cooling and power requirements, which further raises the need for efficient systems.

6.    Automation

Increasing competition in the data center market has proven a challenge for all players. And with the rising demand for data center colocation, there’s a lot of scope for growth for both existing and new players.

Developments like automation allow providers to grow their operational capacities. For starters, automation can help vendors improve facility management by handling server operations like hardware replacement, registration, and component inventory.

Secondly, deploying automation for these tasks is a cost-effective approach for vendors suffering from a scarcity of human resources, especially since it became a huge issue during the pandemic. And lastly, automation also allows vendors to reduce the vulnerabilities that may arise due to human errors.

For all these reasons, automation is one of the trends that you’re likely to see at colocation data centers in the future.


Having a robust, resilient, and scalable digital infrastructure is central to business growth in today’s digital economy. And how well your business handles its data operations, including outsourcing plans, will determine your business performance.

We hope our guide helps you understand upcoming colocation trends better so you can plan your data operation outsourcing for a successful future.


Related Resources:

Colocation 101: A Complete Guide [What it is, Types, Features, How it Works, Benefits]

Colocation Vs. Dedicated Hosting

Colocation Solutions

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