Artificial intelligence (AI) may have popularized big data but applications like the internet of things (IoT) are taking it to the next level. The need to analyze large datasets to come up with insights and the increasing internet traffic is increasing the demand for data and digital storage services.
The global data center market should expand by $304.87 billion between 2020 and 2024, according to a Technavio report. This puts the current global data center market size to more than $300 billion.
According to Internet World Stats, in mid-2019 there were more than 4.5 billion Internet users worldwide, That’s 58.8% of the global population with Internet access and the numbers are growing as internet penetration improves. This implies that data traffic will continue to grow even more, with the 2020 crisis unfolding worldwide. The World Economic Forum expects the data generated by the entire digital universe to be around 44 zettabytes this year. One zettabyte of data is equal to one trillion gigabytes.
The data resulting from the digital space not only needs storage but also on-demand access which makes data centers the core of the data processing, hosting, and Related Services Industry.
The global data center market should expand by $304.87 billion between 2020 and 2024, according to a Technavio report. This puts the current global data center market size to more than $300 billion.
Although North America remains the largest player in the industry, the Asia-Pacific (APAC) region is catching up fast. This has a lot to do with the fact that 50.7% of the World Internet Population is made of Asians. There is increased activity in terms of data center services in the region. Besides international market vendors like IBM and Amazon setting up shop in the APAC region, some homegrown giants like Huawei Investment & Holding Company are transforming the IT landscape.
Where’s the industry more active?
The United States is the largest player in the Data Processing, Hosting and Related Services Industry. According to figures from IBISWorld, the industry will be worth $165.2 billion at the end of 2020. The industry reached a total revenue of $162 billion in 2019. The annual growth of the industry is remarkable, where the industry registered a CAGR of 4.1% in the five years ended in 2019.
Singapore is another hotspot for the industry. Singapore is the favorite spot for data center companies that are looking to capitalize on the strategic importance of the APAC region in the growth of the global Data Processing, Hosting, and Related Services Industry.
The other country that is pursuing the industry aggressively is Lithuania. Lithuania may not have the largest data center market in Europe but the pace at which it is growing is worth a mention. Between 2008 and 2015, the annual turnover in the industry grew by an average of 80% per year. Particularly, the annual turnover was at €11.3 million in 2009 but grew to €75.1 million in 2015, according to figures by Statista.
Industry’s Strong Digital Data Sectors
Numerous sectors rely heavily on the data processing & hosting services industry. The largest sectors include web hosting and application service provisioning. In this space, companies like Alphabet and Amazon are the largest players. According to Gartner, Amazon Web Services consumes 47.8% of the global web hosting market. Other major players include Alphabet’s Google Cloud and Microsoft’s Azure.
Application hosting is another major sector of the Data Processing, Hosting, and Related Services Industry. Here, the data processing and hosting services companies enable their customers to stream digital content. Companies like Equinix and Digital Reality are the biggest players in this sector.
What does the future look like?
The industry enjoys a favorable outlook in terms of revenue generation opportunities. Particularly, the increased penetration of the internet will drive usage and demand for data processing and hosting services. Notably, Technavio estimates that the industry will expand at around 17% CAGR between 2019 and 2023. Within the forecast period, Technavio expects the industry to grow by more than $284.44 billion.
Growth in the industry will come on the back of the increased adoption of streaming services. In addition, the deployment of 5G is firing demand for more data centers. Other advancements in technology like Machine Learning, Artificial Intelligence, and Deep Learning are fueling demand for data centers. Could this be an industry with an over 10-year sustained growth?