Colocation services continue to grow, but the colocation market faces challenges that must be met.

Some, such as competition from cloud-based data solutions and resistance from CIOs not wanting to give up total control of the infrastructure, are more obvious. However, some market issues aren’t talked about as much.

Let’s look at several of the problems and the impact they may have on the colocation market.

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Energy Costs and the Need for Green Colocation

As data center demands grow, so do the energy demands.

A report from the National Resources Defense Council states that data centers are the fastest-growing electricity users in the U.S., and the demand is estimated to grow by over 50%. Data centers face unfavorable publicity as wasteful power hogs and polluters. The colocation providers can combat that with more efficient energy use and alternative power sources.

Data Center Infrastructure Management (DCIM) tools can be used to help reduce unnecessary redundancy and inefficiency. Renewable energy sources, such as solar, wind, and geothermal, should be examined.

Another avenue being taken by some data centers is to take the primary energy source off the electrical grid by using fuel cells that use natural gas. Using the electrical grid as the backup also eliminates polluting diesel generators used as backups by the majority of the data centers.

Future developments, especially as density increases in facilities due to lack of expansion space, could include liquid cooling for equipment rather than air.

Colocation Market Consolidation Problems

The data center colocation market is huge.

However, the market is seeing an increase in buying up and consolidation around the globe.

The top three providers hold over 20% of the colocation market. The total for the top twelve is over 40% of the market. Some advantages of consolidation are possible cost savings, especially in a global market, and stronger security and compliance protocols.

Smaller and mid-sized colocation data centers need to figure out ways to compete by providing services to niche markets or providing unique services that will set them apart.

Growth of Modular and Containerized Data Centers

As mentioned earlier, one problem colocation data centers face is CIO resistance to giving up total IT infrastructure management. Cost efficiency has been one advantage of colocation centers over the argument for a company building its own new facility or renovating existing centers.

However, companies are looking into lower-cost, more efficient modular and containerized solutions rather than building new centers.

Major players in the market include Cisco, Dell, IBM, and Cirrascale.

Colocation managers need to be aware of this trend and counter the advantages colocation has over containerization. In addition, colocation centers can be designed with modular or containers to provide similar advantages of stand-alone containers while providing the advantages colocation offers.

What do you feel are some of the problems facing the colocation market? What solutions might you have for these problems? Let us know your thoughts in the Comments box below.

Learn more about Colocation Data Center Providers and Go-to-Market Strategy (GTM) for Growth.

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