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The colocation market’s appetite for mergers and acquisitions has ensured Equinix and Digital Realty grew faster than the industry average during 2016.
According to industry tracker data from Synergy Research Group, the global colocation market as a whole enjoyed 9% year-on-year growth during 2016.
The colocation market’s top three players, Equinix, Digital Realty and NTT, collectively grew three times the industry average, with Synergy reporting an aggregate year-on-year growth rate of 28% for all three firms.
According to the data, Equinix has the largest share of the Europe, Middle East and Africa (Emea) market, while Digital Realty leads North America and NTT holds the same position in the Asia-Pacific region.
Each company saw their worldwide share of the overall market increase over the course of 2016, thanks – in no small part – to the appetite for acquisitions Equinix and Digital Realty have displayed over the past 12 months.
Despite being announced in May 2015, Equinix finally completed its £2.35bn acquisition of rival colocation provider TelecityGroup at the start of 2016, before rounding out the year by announcing plans to buy 29 datacentres from US telco Verizon for £2.9bn.
To secure regulatory approval for the TelecityGroup acquisition, Equinix was forced to divest a number of its existing facilities. Eight of these were snapped up by Digital Realty, enabling the firm to ramp up its global datacentre footprint in the process.
Outside of the top three, the next ten operators – which include the likes of CenturyLink, China Telecom and Verizon – achieved a 12% year-on-year rise in revenue growth, while those ranked 11 to 20 secured 8% growth over the same time period.
Synergy Research’s colocation tracker covers the performance of retail and wholesale providers, with both types reporting broadly similar growth rates during 2016.
Equinix continues to lead the retail colocation market, while Digital Realty heads up the wholesale sector, but is increasingly growing its presence in the former.
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John Dinsdale, chief analyst and research director at Synergy Research Group, said the analyst house’s findings suggest the colocation market’s smaller players could be in for a tough time of it in years to come.
“In some senses, colocation is following the same path as the cloud, with market power gradually being concentrated in the hands of a few focused and deep-pocketed operators,” he said.
“In both cases, the ability to run large datacentre operations effectively and efficiently is vital to success, and companies that are too diversified or unfocused will struggle.”
Furthermore, as enterprise use of off-premise services continue to grow, the colocation market should feel some benefit, as cloud providers turn to the likes of Equinix and Digital Realty to swiftly build out their local datacentre presence.
“As cloud usage continues to explode, colocation growth opportunities are pulled along in the slipstream,” he said.
Source: Tech News