Hyperscale Datacenter Market Snapshot
| Study Period: | 2018 - 2026 |
| Base Year: | 2021 |
| Fastest Growing Market: | North America |
| Largest Market: | North America |
| CAGR: | 3.38 % |
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Market Overview
The Hyperscale Data Center Market is expected to grow at a CAGR of approximately 3.38% over the forecast period (2021 - 2026). With the recent outbreak of Covid-19 across the world, the demand for the data center is bifurcated with strong buying by hyperscale companies and cloud platforms whereas there was a slowdown in spending by many enterprise users. Pandemic driven leasing activity was concentrated in major cloud markets.
The construction and spending on hyperscale observed little to no effects of the pandemic as prominent operators such as Google and Microsoft kept up with their spending; the construction of new facilities observed various smaller supply chain issues. For instance, in April 2020, Facebook, Google, and Apple announced a slowing of construction of major new data centers in the U.S. and Europe. This is because of the scarcity of other components of the supply chain like fiber optics, batteries, and racks.
- Further, data in the recent past was considered as the foundation of an emerging economy. Almost all enterprises are using more data than what they did before and will probably consume even more data in the future. This has rapidly increased the generation of data which needs to be stored and accessed from somewhere.
- This reality has driven the rise of hyperscale data centers, which are a super-sized version of the mission-critical facilities that consist of the servers powering the Internet. Increasing cloud workloads have influenced companies like Amazon Web Services, Google, Microsoft, Facebook, and Apple to invest huge sums, around USD 1 billion to USD 3 billion, in a single campus to bring out the utmost efficiency.
- The upsurge of hyperscale computing is all about businesses and their association with their data and IT operations. Companies/enterprises do not want to spend millions of dollars to build and operate a data center.
- Some of the key drivers that are directly influencing the hyperscale data center growth are cloud computing, software platforms, social media, and content delivery. Social media has evolved to be a powerful tool, with over 2.28 billion users worldwide, generating volumes of data in the form of blogs, tweets, updates, images, and videos.
- According to Cisco Systems, the global IP data traffic increased from 96,054 petabytes per month in 2016 to 150,910 petabytes per month in 2018 and is anticipated to reach 278,108 petabytes per month by 2021.
- Further, the growing volume of Big Data across the business eco-system is gaining maturity. A recent study by Accenture in May 2018 stated that 79% of enterprise executives agreed that companies that do not embrace Big Data would lose their competitive position and are expected to face extinction. Currently, 83% of enterprises pursue Big Data projects to seize a competitive edge.
Scope of the Report
A data center can support hundreds of physical servers in it and several thousands of virtual machines. A hyperscale facility is made to support thousands of physical servers incorporating millions of virtual machines. The scope of the study for hyperscale datacenter market has considered the companies offering hyperscale datacenters built by their own as well the IT hardware offering companies like IBM and Cisco offering hyperscale data centers for a wide range end-users across verticals globally.
| By End-user | |
| Enterprises | |
| Colocation Providers |
| Geography | |
| United States | |
| Canada | |
| China | |
| Japan | |
| Australia | |
| United Kingdom | |
| Germany | |
| Other Countries |
Key Market Trends
Enterprises are Expected to be a Significant End-user
- In recent times, workloads in large enterprises are being consolidated into larger and more efficient facilities, and it has become commonplace for hyperscale companies like Amazon Web Services, Google, Facebook, Microsoft, and Apple to invest USD 1 billion to USD 3 billion in a single campus. This trend is part of the larger densification of America’s IT infrastructure, which will include data centers in many new and unexpected places.
- The upsurge of hyperscale computing is all about businesses and their association with their data and IT operations. Enterprises do not want to spend millions of dollars to build and operate a data center.
- Further, the growing volume of Big Data across the business eco-system is gaining maturity. A recent study by Accenture in May 2018 stated that 79% of enterprise executives agreed that companies that do not embrace Big Data would lose their competitive position and are expected to face extinction. Currently, 83% of enterprises pursue Big Data projects to seize a competitive edge. This has increased the demand for hyperscale data centers among the enterprises.
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United States to Dominate the Market
- The United States has continued its growth in data center infrastructure solutions. Modular data center investments in tier-2 cities is expected to drive the installation of center facilities, especially for local users, which is driving the growth of the data center cooling market.
- In the United States, the rate of adoption of cloud-based computing is rapidly increasing, owing to which, data centers are increasing in the country. According to Credit Suisse, the United States accounts for the highest number of hyperscale data centers worldwide, by holding about 40% in the country.
- Several efforts have been made by the United States to modernize its infrastructure. In a plan to achieve this, the US Army is planning to spend up to USD 249 million to deploy private cloud computing services and data centers. General Dynamics HP and Northrop Grumman are among the service providers selected for the Army Private Cloud contract, which will provide cloud computing services to consolidate data centers using a secure private cloud.
- Businesses in the United States stand to benefit from the data centers because fir purposes of the US Federal Communications Commission compliance certification, the data center is considered one unit (rather than several discrete systems). This will result in cost benefits and convenience, thereby lessening the burden on users.
- The United States is home to many tech giants, such as Apple, Amazon, Microsoft, and Facebook, offering hyperscale data centers. Also, the volume of Big Data is tremendously increasing; moreover, companies are adopting new strategies to ascend several data centers.
- The companies in the country are extensively investing in AI infrastructure, which demands the need for immediate processing of vast amounts of data being acquired on a real-time basis. Also, the governments in the region are taking initiatives to adopt upcoming technologies. In February 2019, the US government announced the Artificial Intelligence Initiative to prioritize AI investments in research and development, increase access to federal data and models for that research, and prepare workers to adapt to the era of AI.
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Competitive Landscape
The market for hyperscale datacenters is highly consolidated because of the dominance by a few key companies in the market. Also, the barrier for new entrants is high due to the requirement of the high initial cost to enter into the market. These are companies that are continuously investing in making strategic partnership and acquisition to gain more market share.
- May 2020 - KKR is setting aside USD 1 billion from its third global infrastructure fund to invest in a new data center venture in Europe. The private equity firm will team up with data center industry veteran Franek Sodzawiczny to form Global Technical Realty, an entity that will build data centers for large European technology companies.
- January 2020 - Microsoft Corporation partnered with AT&T for enabling next-generation solutions on the edge. The partnership is aimed at enabling new 5G, cloud, and edge computing solutions to drive enterprise capabilities for companies around the world.
Recent Developments
- January 2021 - IBM, Europe-based cloud provider OVHcloud and data management firm Atempo Group are developing a storage-as-a-service solution for data centres across Europe, with wider plans to roll the service out worldwide in the coming months. The offering will be based on IBM’s 3592 enterprise tape technologies and leverage Atempo’s Miria platform, while OVHcloud will host and operate it through data centres in the French territory.
- July 2020 - Data center startup Novva launched with USD 1 billion investment; and backing from real estate investment firm CIM Group, with construction already under way on a massive data center campus in Utah.
Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Force Analysis
4.2.1 Threat of New Entrants
4.2.2 Bargaining Power of Buyers/Consumers
4.2.3 Bargaining Power of Suppliers
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Industry Value Chain Analysis
4.4 Market Drivers
4.4.1 Growing Emphasis on Reduction of CAPEX & OPEX Among Large-scale Organizations
4.4.2 Steady Increase in Datacenter Traffic Coupled with Growth in Spending on Datacenter Technology
4.5 Market Challenges
4.5.1 Data Center Security Challenges
4.5.2 Infrastructural & Operational Challenges
4.6 Assessment of Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By End-user
5.1.1 Enterprises
5.1.2 Colocation Providers
5.2 Geography
5.2.1 United States
5.2.2 Canada
5.2.3 China
5.2.4 Japan
5.2.5 Australia
5.2.6 United Kingdom
5.2.7 Germany
5.2.8 Other Countries
6. COMPETITIVE LANDSCAPE
6.1 Company Profiles*
6.1.1 Infrastructure Providers
6.1.1.1 Hewlett Packard Enterprise Co
6.1.1.2 Cisco Systems Inc.
6.1.1.3 Huawei Technologies Co.
6.1.1.4 Nvidia Corporation
6.1.1.5 Quanta Computer Inc.
6.1.1.6 IBM Corporation
6.1.2 Major Hyperscale Datacenter Operators
6.1.2.1 Amazon Web Services, Inc.
6.1.2.2 Microsoft Corporation
6.1.2.3 Alibaba Group
6.1.2.4 Alphabet Inc.
6.1.2.5 Facebook Inc.
7. INVESTMENT ANALYSIS
8. MARKET OPPORTUNITIES AND FUTURE TRENDS
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Frequently Asked Questions
What is the study period of this market?
The Hyperscale Datacenter Market market is studied from 2018 - 2026.
What is the growth rate of Hyperscale Datacenter Market?
The Hyperscale Datacenter Market is growing at a CAGR of 3.38% over the next 5 years.
What is Hyperscale Datacenter Market size in 2018?
The Hyperscale Datacenter Market is valued at 89 Billion USD in 2018.
What is Hyperscale Datacenter Market size in 2026?
The Hyperscale Datacenter Market is valued at 107 Billion USD in 2026.
Which region has highest growth rate in Hyperscale Datacenter Market?
North America is growing at the highest CAGR over 2021- 2026.
Which region has largest share in Hyperscale Datacenter Market?
North America holds highest share in 2021.
Who are the key players in Hyperscale Datacenter Market?
Amazon Web Services, Inc., Microsoft Corporation, Alphabet Inc., Alibaba Group, Facebook Inc. are the major companies operating in Hyperscale Datacenter Market.
