Data center as a service enables enterprises to access servers, storage, networking, and other infrastructure components hosted in remote data centers on a pay-per-use subscription model. It gives businesses access to enterprise-grade infrastructure without upfront capital investments or long-term commitments. Enterprises can scale their infrastructure up or down on demand, paying only for what they consume. This flexible consumption-based model allows companies to focus on their core business while outsourcing infrastructure concerns to data center service providers.
The Global Data Center as a Service Market is estimated to be valued at US$ 89.58 Billion in 2024 and is expected to exhibit a CAGR of 18.3% over the forecast period 2024-2031.
Key Takeaways
Key players operating in the data center as a service are AWS, Microsoft, IBM, Google, Equinix, Alibaba among others. The increasing adoption of cloud computing and outsourcing of infrastructure by SMEs is driving the demand for data center as a service. Major players are focusing on expanding their infrastructure footprint and offering additional value-added services to gain market share. The growing adoption of advanced technologies such as edge computing, 5G, and AI is enabling various technological advancements in data center as a service.
Market Trends
Data Center As A Service Market Demand is increasing preference for pay-per-use operational expenditure (OPEX) model over capital expenditure (CAPEX) heavy on-premises infrastructure is one of the key trends in the market. Another key trend is colocation which involves leasing physical space and network connectivity from colocation providers to install enterprises' servers and storage in their hyper-scale data centers.
Market Opportunities
Edge computing is expected to open new opportunities for data center service providers to offer distributed infrastructure close to end-users. Furthermore, growth in industry 4.0, IoT, and autonomous vehicles will augment the volume of data generated at the edge, driving demand for edge data center services.
Impact of COVID-19 on Data Center as a Service Market Growth
The COVID-19 pandemic has significantly impacted the growth of the data center as a service market. During the pre-COVID times, the market was growing at a brisk pace owing to rapid digital transformation across industries. However, the outbreak led to nationwide lockdowns which disrupted the supply chains and halted on-site operations and infrastructure upgrades temporarily. This acted as a short-term roadblock to the market expansion.
As the lockdowns were lifted gradually, organizations accelerated their digitalization plans to ensure business continuity in the remote working environment. This saw a massive surge in demand for scalable, reliable and secure cloud-based infrastructure services. Datacenter service providers responded proactively by augmenting their cloud and connectivity capabilities. They ensured seamless switch to work-from-home by facilitating efficient remote access and collaboration tools for customers. This helped regain momentum in the latter half of 2020.
Moving forward, the market is expected to witness robust growth on the back of growing cloud migration of workloads and adoption of hybrid cloud models. Edge and 5G networks will further bolster the need for cloud-based datacenter infrastructure. Service providers are innovating their offerings to provide agile, resilient and automated infrastructure tailored for emerging technologies like artificial intelligence, internet of things, block chain etc. While concerns around data security and compliance exist, adherence to stringent protocols can help address risks and boost user confidence. Collaborations between providers and customers will also be crucial to capitalize on new opportunities in the post-pandemic era.
Geographical Regions with Highest Market Concentration
In terms of value, the data center as a service market is highly concentrated in North America, with the United States accounting for the majority share. This can be attributed to heavy investments in development of hyperscale data centers by leading cloud providers like AWS, Microsoft, Google in this region. Additionally, an advanced digital infrastructure and early adoption of cloud among enterprises have supported market growth. However, Asia Pacific is emerging as an attractive market driven by the thriving IT industry in countries such as China, India and Australia along with growing demand for cloud-based services. The region is expected to surpass North America to become the top revenue generator in the forthcoming years.
Fastest Growing Regional Market
The data center as a service market is expanding rapidly in Asia Pacific excluding Japan (APEJ). Favorable government policies supporting digitalization, massive digitally-savvy population and increasing foreign investments in the technology sector are driving market growth. In particular, China and India have emerged as the most attractive hubs owing to availability of skilled workforce, lower costs and presence of global hyperscale data center operators. 5G rollouts and schemes like Digital India are also propelling APEJ ahead. Innovation led by local cloud players is further complementing the market expansion. As a result, APEJ is projected to register the highest CAGR during the forecast period and cement its position as the fastest growing regional segment.
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