TECH SUPPLIER Sep 2018 - Market Analysis Perspective - Doc # US44315818

Market Analysis Perspective: U.S. Hosting and Colocation Services, 2018

By: Courtney MunroeGroup Vice President of Worldwide Telecommunications Research

On-line Presentation

Abstract

This IDC Market Analysis Perspective presents the U.S. hosting and colocation services market for 2018. The hosting infrastructure services (HIS) market continues to grow despite the increasing adoption of cloud infrastructure as a service (IaaS). Providers are building their services portfolio to address the changing needs of enterprise customers. Traditional hosting services are now accompanied by the automation, scaling, and flexibility features that have been popularized with cloud services. IDC expects steady growth in the HIS market driven mainly by the evolution of hybrid IT, which enables customers to run their workloads in multiple environments including on-premises, traditional hosting, and public cloud. The adoption of the 3rd Platform such as cloud, mobility, Internet of Things (IoT), and analytics is accelerating the move to a global digital business. Enterprises must be able to conduct business anywhere and with a wider set of global customers. This trend will have a pervasive impact on enterprise IT processes, connectivity needs, and accessibility to customer data. Digital transformation (DX) is critical to enterprises' competitive positioning and ability to capture new revenue opportunities.

The datacenter is now the foundation for new digital business models in a growing set of industries, and third-party colocation facilities are well positioned as strategic hubs for digital economy workflows and transactions, cloud IT/applications sourcing, and data-driven business processes. The colocation market is evolving with significant consolidation as telecom providers give way to pure-play companies such as Equinix and Digital Realty Trust. These companies will expand capacity at existing regional centers as well as establish new datacenters globally.

Market size and forecast of the hosting and colocation services market:

  • The U.S. hosting infrastructure services market was worth $18.6 billion in 2017. IDC forecasts this market will grow at a CAGR of 6.7% to reach $25.7 billion in 2022. While public cloud IaaS acts as a substitute for traditional HIS in some instances (particularly unmanaged dedicated servers), in other instances, it complements traditional HIS.
  • The U.S. market for colocation services reached $7.2 billion in 2017. IDC expects the market to expand at a five-year compound annual growth rate (CAGR) of 11.4%, reaching $12.3 billion in 2022.
  • Digital business is increasingly global in nature and requires secure and fast access to customers and partners. As enterprises move toward becoming global digital businesses, they are accelerating their digital transformation efforts to address the proliferation of data and the increased complexity of their IT environments. Enterprises are also assessing the resources and skills required to handle modern IT digital infrastructure, consolidating their datacenter facilities, and increasingly adopting cloud-based applications, infrastructure, and storage. Secure cloud interconnection, colocation, and managed hosting in cloud environments are becoming increasingly important to enterprises' long-term strategy.

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