On the same page – data center co-location market segments and terms

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In China, Internet Data Center (IDC) is synonymous with all the following terms:

  •  Wholesale co-location data center
  • Multi-tenanted co-location data center
  • Retail co-location data center
  • Webhosting

They don’t classify the IDC into the above terms – simply just IDC.

The data center industry sometimes dropped the term co-location, i.e. wholesale co-location data center = wholesale data center.

I believe these separate terms are created by the data center service providers ourselves.

I believe the different market segment terms came about due to the sheer size of the US market that these somewhat distinct segments are formed and they tend to differentiate along the scale and size of the client’s data hall size requirements.

  • Enterprise aka in-house data center
  • Wholesale co-location data center (preference to have one client per building)
  • Multi-tenanted co-location data center (preference for 1 customer = 1 data hall = 1 private vault =1 private data room)
  • Retail co-location data center (One rack or within one rack, includes dedicated server hosting)
  • Webhosting aka managed hosting, shared server hosting, and virtual server hosting
  • Cloud Data Center

Let me put this into perspective. With the exception of enterprise data center, the co-location data center terms are from the perspective of the data center co-location service providers and not usually from the perspective of clients.

The big boys are those that are big scale, the DRTs, Equinix, but there are lots of data center co-location service providers in the US that we outside of that market are not aware of. In the end, DRT is still less than 10 percent of data center white space in the US, so there are a lot of service providers while it is a big pie to slice and dice.

There is little agreement to the definition of these terms globally though. A particular type may be dominant in a particular country due to the fact that clients are only looking for say, retail co-location data center. In Jakarta, while dedicated data center building is being planned, most of the data centers are the retail and multi-tenanted in mixed use buildings as the scale of demand are aggregately large but coming from lots of small and middle clients because most large enterprises prefers self-built and in-house.

There is no agreement on the term Cloud data center, since it can exist in any of the data center market segment types.

It is perhaps one of the reason why there is very few campus-scale wholesale co-location data center in China because customer demand have not reached that scale yet and also the way land are allocated in China do not favor data-center-industry-park as the local government prefers job-creation while data center ultimately do not employ a lot of workers. They do like cloud data center as they perceive these will employ lots of IT engineers/programmers.

The client do not care how you position your data center in the data center market by size, they only care if your data center space meet their requirements in terms of technical and financial attributes.

While the US and thus the US-based data center co-location service providers has enjoyed growth in demand of large scale data centers, the rest of the global market may not see the same level of demand for large scale data center.

In Europe, when I was attending London’s edition of DCD conference in 2016, the European multi-tenanted co-location service providers are giving feedback to OCP workshop organizers that their data center space generally do not cater to entire facility meeting the average power requirements of OCP racks. While in China, only Alibaba has gone the route to want large scale while Baidu and Tencent are managing their data center space growth via presence in multiple buildings by multiple multi-tenanted co-location service providers. Large scale data center park builder in Hebei has faced problem of building ahead of predicted demand when there is little takers of their already built 3 data center buildings.

I was working in a data center co-location service provider that started off with offering retail co-location, i.e. one rack or sub-division of a rack, which then moved into multi-tenanted co-location, we have clients of all types and the client don’t really care about how we define our data center co-location market position. They only want to know if we will meet their requirement and submit a price proposal. A rack-mount server fits into a standard IT rack, so whether the rack is shared or the room or the building is shared may not matter to the client.

In some cases, clients actually may prefer smaller data center service providers who are considered more responsive while the larger enterprise may tend to go for global wholesale data center co-location service providers because they have a global agreement and consistent standard, to each their own.

Back in the dotcom burst days, data centers closures due to overbuilt supply has seen the then dominant players like Exodus and Digital Island changed hands, scale down, and sold.

In the end of the day, it is the clients and their needs that define which market segment will grow.

Reference:

  1. https://en.wikipedia.org/wiki/Colocation_centre
  2. https://cyrusone.com/corporate-blog/understanding-the-different-types-of-data-center-facilities/
  3. http://www.technavio.com/report/global-data-center-multi-tenant-wholesale-market
  4. http://www.missioncriticalmagazine.com/articles/88290-report-data-center-colocation-market-annualized-revenue-projected-to-reach-33bn-worldwide-by-end-of-2018
  5. https://structureresearch.net/product/marketshare-report-global-data-centre-colocation/
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On the same page – data center co-location market segments and terms

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