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Tuesday, 22 July 2014 09:38

The European data centre market is set to experience healthy growth for the next four years

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Data centre building is set to increase off the back of a doubling in the hosting and co-location markets by 2018 due to cloud technologies, a new report from analysts Frost & Sullivan finds.


Frost & Sullivan predicts the market for European data centres is expected to see a compound annual growth rate of 16% up to 2018 despite several restraints and the United Kingdom, Germany, France and Benelux will be the largest markets in the region.


New analysis from Frost & Sullivan, European Data Centre Services Market, which covers the retail colocation and managed hosting segments, finds that retail colocation will witness lower growth rates than managed hosting due to its market maturity. The retail colocation segment generated revenues of $2.83 billion (£1.66bn) in 2013 and is estimated to reach $5.27 billion (£3.09bn) in 2018; managed hosting revenues will increase from $2.01 billion (£1.18bn) to $4.90 billion (£2.87bn) over the same period.


"The pressing need to focus internal resources on innovative IT tasks and capitalise on economical IT management services compel enterprises to turn to managed hosting providers for data centre services," says Frost & Sullivan Information and Communication Technologies Research Analyst Shuba Ramkumar. "The growth of cloud services will also drive the colocation services market in the short term."


In the long term, however, increasing efficiency and security of the cloud will challenge the growth of the retail colocation market.


In addition, organisations across Europe are bound by regional data laws that complicate decisions with respect to availing outsourcing services. The location of data centres, therefore, becomes an important consideration for users when choosing a provider. The regional nature of European organisations also means that many of them are wary of foreign companies and prefer local providers. These cultural and language barriers are especially strong in countries such as France, Spain, and Italy.


"In order to widen their customer base across Europe, it is important for providers to offer services from a data centre located within a region," advises Ramkumar. "At the same time, they must provide efficient IT support as well as ensure data confidentiality and security to win the trust of potential customers."


Due to the need to implement different infrastructure frameworks based on application type, enterprises will use traditional data centre services alongside the adoption of cloud services. As a result, the European data centre services market is focussing on more hybrid data centre services that combine co-location, managed hosting and cloud solutions.


Commenting on the results of the survey Zahl Limbuwala, CEO of Romonet warned that the growth also creates some new issues. "The fact that the data centre services market is expected to almost double by 2018 is great news for the industry. However, it also represents a significant risk for an industry that is becoming more competitive by the minute. Many service providers' understanding of their data centres' cost performance is still pretty immature. Therefore there is a significant risk of wasted investment in data centres that quite simply aren't profitable, in an attempt to meet the services boom.” Adding, “Without the ability to predict, control and allocate data centre costs companies cannot hope to ensure they profit from this opportunity. Organisations such as Google, Facebook and eBay are beginning to discover the Holy Grail of predicting energy costs: formulae and the associated tools that can quickly and reliably predict the TCO of data centres and IT services. Armed with this knowledge, service providers have the confidence and the accountability to make the most of the growing data centre services market."

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