Israel Data Center Market Size and Share

Israel Data Center Market (2025 - 2030)

Israel Data Center Market Analysis by Mordor Intelligence

The Israel Data Center Market size is estimated at USD 581.24 million in 2025, and is expected to reach USD 890.69 million by 2030, at a CAGR of 8.91% during the forecast period (2025-2030). In terms of installed base, the market is expected to grow from 378.80 megawatt in 2025 to 532.90 megawatt by 2030, at a CAGR of 7.06% during the forecast period (2025-2030). The market segments' shares and estimates are calculated and reported in terms of MW. Buoyant demand comes from hyperscale roll-outs, sovereign cloud mandates, and a steady flow of submarine cable landings that reinforce Israel’s bridge position between Europe and Asia. Mega-scale facilities capture the majority of new capacity because their hardened designs meet security requirements while minimizing the cost per megawatt. Colocation remains the preferred business model, thanks to its carrier-neutral interconnection density, while government cloud projects, such as Project Nimbus, continue to draw hyperscale providers into sovereign partnerships. Still, grid congestion and land scarcity in Tel Aviv temper near-term build-outs and keep wholesale pricing firm. Established local operators, therefore, focus on secondary cities where land is cheaper, renewable energy is abundant, and security considerations encourage geographic diversity.

Key Report Takeaways

  • By data center size, mega-scale sites held 42.31% revenue share in 2024, while medium facilities are forecast to expand at a 7.89% CAGR through 2030.  
  • By tier, Tier 3 infrastructure accounted for 68.96% of the Israel data center market share in 2024, and Tier 4 is advancing at a 7.39% CAGR through 2030.  
  • By type, colocation claimed an 81.00% share of the Israel data center market size in 2024; self-built hyperscale deployments are projected to rise at a 7.89% CAGR between 2025-2030.  
  • By end user, IT and telecom captured 59.74% of demand in 2024, while BFSI shows the quickest uptick at 7.39% CAGR to 2030.  
  • By geography, Tel Aviv led with 47.45% of installed capacity in 2024; the Rest of Israel segment is set to accelerate at an 8.10% CAGR through 2030.

Segment Analysis

By Data Center Size: Mega Facilities Drive Market Consolidation

Mega sites captured 42.31% Israel data center market share in 2024, reflecting wholesale contracts that lock in multi-megawatt blocks for cloud and government buyers. These campuses deliver lower per-MW build cost because chilled-water loops, diesel farms, and security buffers scale more efficiently than in small halls. Medium facilities are projected to grow at a 7.89% CAGR through 2030 as 5G edge roll-outs demand 1-5 MW nodes in secondary cities.[2]Israel Ministry of Communications via International Trade Administration, “Israel – Digital Economy,” trade.gov Underground construction methods, pioneered by Oracle’s nine-floor bunker, add upfront capex yet command premium rents for defense-grade resilience.  

Medium facilities serve as agile entry points because modular designs reduce build cycles to under 12 months, allowing sponsors to capture sudden demand spikes without financing 40 MW campuses. Smaller hubs below 2 MW retain niche roles for payment gateways and regulatory workloads that cannot be relocated from metro Tel Aviv. 

Israel Data Center Market: Market Share by Data Center Size

Note: Segment shares of all individual segments available upon report purchase

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By Tier Type: Tier 3 Infrastructure Balances Cost and Resilience

Tier 3 designs held 68.96% of the Israel data center market share in 2024 by delivering N+1 redundancy that satisfies most service-level agreements without the expense of Tier 4’s twin-cord approach. The blueprint’s prevalence owes much to Israeli enterprises that prize quick deployment and manageable opex over the absolute uptime guaranteed by Tier 4. Yet the security environment is swinging sentiment toward continuous-operation designs: Tier 4 is poised for a 7.39% CAGR as defense, fintech, and AI labs demand 99.995% availability. Tier 1 and Tier 2 footprints shrink steadily because public cloud migration makes their basic fault tolerance less acceptable for mission-critical loads.  

Tier 4 adoption accelerates outside Tel Aviv, where underground plots enable economically viable deep-burial builds. Operators leverage the “power island” strategy-dual substations plus redundant on-site generation-to qualify for Tier 4 while accessing lower-priced land. Tier 3 continues to dominate everyday enterprise migrations, particularly among SaaS vendors and telecom switches, striking a balance between cost discipline and resilience. Over time, the Israel data center market's contribution from Tier 4 is expected to expand as sovereign and AI workloads demand ultra-high uptime; however, Tier 3 remains the sweet spot for generalized hosting budgets.  

By Data Center Type: Colocation Dominance Reflects Connectivity Premium

Colocation captured 81.00% of the Israel data center market size in 2024 because carrier-neutral meet-me rooms aggregate domestic and international traffic, creating irreplaceable network effects. Retail colo sells flexible half-racks to SMBs and managed-service providers, whereas wholesale colo signs 5-15 MW blocks with cloud and telecom operators. Hyperscale self-builds rise at 7.89% CAGR as Microsoft and Google craft sovereign regions adjacent to Nimbus workloads, but they still interconnect through existing carrier hotels to tap Israel’s east-west fiber bundles.  

The colocation model benefits Tel Aviv carrier hotels, such as MedOne’s MedNautilus campus, which host submarine cable landing gear and Layer 2 exchange points. These sites secure double-digit EBITDA margins because cross-connect fees and peering services add high-gross-margin revenue streams. Edge and enterprise private clouds extend colocation’s footprint into suburban sites, reinforcing its hold on the total Israeli data center market share despite headline-grabbing hyperscale projects. Looking ahead, AI clusters that demand specialized power densities may shift some volume to single-tenant halls; yet, even those clusters require low-latency peering, ensuring that colocation remains foundational.  

Israel Data Center Market: Market Share by Data Center Type

Note: Segment shares of all individual segments available upon report purchase

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By End User: IT and Telecom Sectors Anchor Market Demand

IT and telecom users generated 59.74% of revenue in 2024, reflecting Israel’s standing as a startup nation with heavy content-delivery and routing requirements. Carriers require multicast hubs, voice switching, and 5G core nodes within neutral facilities, while SaaS companies co-locate near peering points to minimize latency. BFSI workloads are poised to expand at the fastest rate, recording a 7.39% CAGR, driven by digital banking regulations and Central Bank pilot sandboxes that require in-country processing.  

E-commerce, media streaming, and gaming applications continue to add GPU capacity, although their aggregate share remains smaller. Government ministries, bolstered by Project Nimbus, contract long-term leases, injecting term certainty that is valuable for financing new builds. Manufacturing and healthcare probe proof-of-concept edge deployments for Industry 4.0 and telemedicine, expanding the addressable Israel data center market size beyond legacy IT. Because telecom and cloud players sign multi-megawatt deals, their bargaining power puts downward pressure on effective rates; yet, their stable traffic anchors utilization, safeguarding operator cash flows.  

Geography Analysis

Tel Aviv retained 47.45% of % Israel data center market share in 2024, leveraging dense fiber rings and the lion’s share of submarine cable landing sites. Its concentration of financial headquarters and venture-capital-backed SaaS firms translates to sticky, low-latency demand that sustains premium pricing. However, land scarcity and zoning hurdles restrict the supply of new land, causing new entrants to scout for opportunities in peripheral towns within a 30 km radius. Grid constraints exacerbate the squeeze; operators queue for up to three years to secure 10 MW allocations, compelling some to deploy interim battery farms that lift capex.  

Rosh HaAyin has emerged as a spillover destination, combining Tel Aviv’s proximity with lower real estate prices. Planned regional substations promise cleaner power availability, and municipal incentives slash permitting times to under 12 months. MedOne’s USD 270 million Kfar Yona campus illustrates this shift, blending underground construction with six-hour autonomous fuel reserves. Rosh HaAyin’s progress demonstrates that geographic diversification can preserve network performance even as operators move outward from the traditional core, thereby enlarging the Israel data center market size in secondary rings.  

The Rest of Israel segment, spanning Negev Desert solar parks to northern defense corridors, logs an 8.10% CAGR through 2030, driven by renewable power access, cheaper acreage, and strategic dispersion initiatives. The government’s Timna mine tender epitomizes creative land re-use, offering 520 acres of below-grade expanse paired with high-irradiance PV arrays that could shave NIS 87 million per year from electricity bills. Renewable-rich plots offset cooling penalties in hot climates, while natural topography aids bunker-style builds. As submarine cable projects add new Mediterranean landings, latency penalties for southern sites decrease, reinforcing the viability of dispersed build programs and driving overall Israel data center market growth beyond Tel Aviv's boundaries.  

Competitive Landscape

The Israel data center market shows moderate concentration as a handful of incumbents balance local knowledge with global funding advantages. MedOne operates four carrier-neutral sites totaling 25,000 sqm and has seven more in the pipeline, emphasizing bunker-style resilience that resonates with defense clients. Bezeq International leverages its Jonah cable ownership and ISP heritage to cross-sell transit and hosting, and in July 2025, inked an MoU to acquire Exelera Telecom for USD 160 million, expanding its undersea reach. These moves reveal a defensive strategy: own both physical cables and colo space to lock users into integrated connectivity stacks.  

Hyperscalers adopt varied approaches. Microsoft presses ahead with a dedicated region to satisfy Nimbus workloads and EU adequacy data-transfer rules.[3]Microsoft Reporter, “Microsoft to launch new cloud datacenter region in Israel,” Microsoft, microsoft.com Oracle opts for deep-burial, nine-floor caverns to court high-security tenants, while AWS paused further builds after domestic demand lagged forecasts, signaling that not all global cloud templates port neatly to Israel’s small population. Yet GPU-hungry firms such as Nvidia and Nebius commit multibillion-shekel campuses, drawn by the country’s AI talent and defense procurement channels. This bifurcation suggests room for niche specialists even as global giants dominate top-line capacity additions.  

A competitive edge increasingly hinges on provenance of power, innovative cooling solutions, and a robust compliance posture, rather than raw floor space. Operators deploying liquid cooling racks, on-site solar storage microgrids, and ISO 27001-compliant clearances, as certified by the Privacy Protection Authority, win government tenders. Capital depth matters: underground structures demand 40% higher capex, limiting new entrants unless they secure institutional backing. Mergers such as Bezeq-Exelera foreshadow a tighter market, where submarine cable control, renewable PPAs, and defense-grade designs are prerequisites for remaining relevant in the evolving Israeli data center market.  

Israel Data Center Industry Leaders

  1. Adgar Investments and Development Ltd

  2. MedOne Digital Ltd

  3. Bynet Data Communications Ltd

  4. Bezeq International Ltd

  5. Digital Realty Trust Inc

  6. *Disclaimer: Major Players sorted in no particular order
Israel Data Center Market
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Recent Industry Developments

  • July 2025: Bezeq Group signed a preliminary MoU to acquire Exelera Telecom Ltd for USD 160 million, enhancing submarine cable reach and data center operations.
  • July 2025: Nvidia announced plans for a multibillion-dollar mega campus near Yokneam, including a USD 500 million server farm in Ramot Menashe.
  • May 2025: Nebius Group secured a NIS 500 million (USD 135 million) package to build Israel’s national AI supercomputer, targeting go-live by early 2026.
  • April 2025: Partner Communications launched a global business division to deepen international roaming, IoT, and dark-fiber agreements.

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We provide a complimentary and exhaustive set of data points on the country and regional level metrics that present the fundamental structure of the industry. Presented in the form of 50+ free charts, the sections cover difficult to find data on various countries on smartphone users, data traffic per smartphone, mobile and broadband data speed, fiber connectivity network, and submarine cables.

Israel Data Center Market
Israel Data Center Market
Israel Data Center Market
Israel Data Center Market

Table of Contents for Israel Data Center Industry Report

1. INTRODUCTION

  • 1.1 Study Assumptions and Market Definition
  • 1.2 Scope of the Study

2. RESEARCH METHODOLOGY

3. EXECUTIVE SUMMARY

4. MARKET LANDSCAPE

  • 4.1 Market Overview
  • 4.2 Market Drivers
    • 4.2.1 Hyperscale cloud region roll-outs accelerate wholesale demand
    • 4.2.2 E-government digitalization mandates local data hosting
    • 4.2.3 5G-enabled IoT proliferation pushes edge build-outs
    • 4.2.4 Defense-grade security needs outside Tel-Aviv core
    • 4.2.5 New submarine cable landings cut latency and costs
    • 4.2.6 Renewable energy incentives in Negev industrial zones
  • 4.3 Market Restraints
    • 4.3.1 Land scarcity and soaring real-estate prices in hotspots
    • 4.3.2 High electricity tariffs and grid congestion
    • 4.3.3 Water scarcity limiting liquid-cooling adoption
    • 4.3.4 Geopolitical security risks driving hardened-facility CAPEX
  • 4.4 Market Outlook
    • 4.4.1 IT Load Capacity
    • 4.4.2 Raised Floor Space
    • 4.4.3 Colocation Revenue
    • 4.4.4 Installed Racks
    • 4.4.5 Rack Space Utilization
    • 4.4.6 Submarine Cable
  • 4.5 Key Industry Trends
    • 4.5.1 Smartphone Users
    • 4.5.2 Data Traffic Per Smartphone
    • 4.5.3 Mobile Data Speed
    • 4.5.4 Broadband Data Speed
    • 4.5.5 Fiber Connectivity Network
    • 4.5.6 Regulatory Framework
  • 4.6 Value Chain and Distribution Channel Analysis
  • 4.7 Porter's Five Forces Analysis
    • 4.7.1 Threat of New Entrants
    • 4.7.2 Bargaining Power of Suppliers
    • 4.7.3 Bargaining Power of Buyers
    • 4.7.4 Threat of Substitutes
    • 4.7.5 Competitive Rivalry

5. MARKET SIZE AND GROWTH FORECASTS (MEGAWATT)

  • 5.1 By Data Center Size
    • 5.1.1 Large
    • 5.1.2 Massive
    • 5.1.3 Medium
    • 5.1.4 Mega
    • 5.1.5 Small
  • 5.2 By Tier Type
    • 5.2.1 Tier 1 and 2
    • 5.2.2 Tier 3
    • 5.2.3 Tier 4
  • 5.3 By Data Center Type
    • 5.3.1 Hyperscale/Self-built
    • 5.3.2 Enterprise/Edge
    • 5.3.3 Colocation
    • 5.3.3.1 Non-Utilized
    • 5.3.3.2 Utilized
    • 5.3.3.2.1 Retail Colocation
    • 5.3.3.2.2 Wholesale Colocation
  • 5.4 By End User
    • 5.4.1 BFSI
    • 5.4.2 IT and ITES
    • 5.4.3 E-Commerce
    • 5.4.4 Government
    • 5.4.5 Manufacturing
    • 5.4.6 Media and Entertainment
    • 5.4.7 Telecom
    • 5.4.8 Other End Users
  • 5.5 By Hotspot
    • 5.5.1 Tel Aviv
    • 5.5.2 Rosh HaAyin
    • 5.5.3 Rest of Israel

6. COMPETITIVE LANDSCAPE

  • 6.1 Market Concentration
  • 6.2 Strategic Moves
  • 6.3 Market Share Analysis
  • 6.4 Company Profiles (includes Global level Overview, Market level overview, Core Segments, Financials as available, Strategic Information, Market Rank/Share for key companies, Products and Services, and Recent Developments)
    • 6.4.1 Adgar Investments and Development Ltd.
    • 6.4.2 MedOne Digital Ltd.
    • 6.4.3 Bynet Data Communications Ltd.
    • 6.4.4 Bezeq International Ltd.
    • 6.4.5 Digital Realty Trust Inc
    • 6.4.6 Serverfarm LLC
    • 6.4.7 EdgeConneX Inc.
    • 6.4.8 Global Technical Realty Holdings Ltd.
    • 6.4.9 HQSERV Communication Solutions Ltd.
    • 6.4.10 3Samnet Ltd.
    • 6.4.11 Active Cloud Ltd.
    • 6.4.12 Partner Communications Company Ltd.
    • 6.4.13 Cellcom Israel Ltd.
    • 6.4.14 Sparkle S.p.A.
    • 6.4.15 Amazon Web Services Inc
    • 6.4.16 Oracle Corporation

7. MARKET OPPORTUNITIES AND FUTURE OUTLOOK

  • 7.1 White-space and unmet-need assessment
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List of Tables & Figures

  1. Figure 1:  
  2. VOLUME OF IT LOAD CAPACITY, MW, ISRAEL, 2018 - 2030
  1. Figure 2:  
  2. VOLUME OF RAISED FLOOR AREA, SQ.FT. ('000), ISRAEL, 2018 - 2030
  1. Figure 3:  
  2. VALUE OF COLOCATION REVENUE, USD MILLION, ISRAEL, 2018 - 2030
  1. Figure 4:  
  2. VOLUME OF INSTALLED RACKS, NUMBER, ISRAEL, 2018 - 2030
  1. Figure 5:  
  2. RACK SPACE UTILIZATION, %, ISRAEL, 2018 - 2030
  1. Figure 6:  
  2. COUNT OF SMARTPHONE USERS, IN MILLION, ISRAEL, 2018 - 2030
  1. Figure 7:  
  2. DATA TRAFFIC PER SMARTPHONE, GB, ISRAEL, 2018 - 2030
  1. Figure 8:  
  2. AVERAGE MOBILE DATA SPEED, MBPS, ISRAEL, 2018 - 2030
  1. Figure 9:  
  2. AVERAGE BROADBAND SPEED, MBPS, ISRAEL, 2018 - 2030
  1. Figure 10:  
  2. LENGTH OF FIBER CONNECTIVITY NETWORK, KILOMETER, ISRAEL, 2018 - 2030
  1. Figure 11:  
  2. VOLUME OF IT LOAD CAPACITY, MW, ISRAEL, 2018 - 2030
  1. Figure 12:  
  2. VOLUME OF HOTSPOT, MW, ISRAEL, 2018 - 2030
  1. Figure 13:  
  2. VOLUME SHARE OF HOTSPOT, %, ISRAEL, 2018 - 2030
  1. Figure 14:  
  2. VOLUME SIZE OF TEL AVIV, MW, ISRAEL, 2018 - 2030
  1. Figure 15:  
  2. VOLUME SHARE OF TEL AVIV, MW, HOTSPOT, %, ISRAEL, 2018 - 2030
  1. Figure 16:  
  2. VOLUME SIZE OF REST OF ISREAL, MW, ISRAEL, 2018 - 2030
  1. Figure 17:  
  2. VOLUME SHARE OF REST OF ISREAL, MW, HOTSPOT, %, ISRAEL, 2018 - 2030
  1. Figure 18:  
  2. VOLUME OF DATA CENTER SIZE, MW, ISRAEL, 2018 - 2030
  1. Figure 19:  
  2. VOLUME SHARE OF DATA CENTER SIZE, %, ISRAEL, 2018 - 2030
  1. Figure 20:  
  2. VOLUME SIZE OF LARGE, MW, ISRAEL, 2018 - 2030
  1. Figure 21:  
  2. VOLUME SIZE OF MASSIVE, MW, ISRAEL, 2018 - 2030
  1. Figure 22:  
  2. VOLUME SIZE OF MEDIUM, MW, ISRAEL, 2018 - 2030
  1. Figure 23:  
  2. VOLUME SIZE OF MEGA, MW, ISRAEL, 2018 - 2030
  1. Figure 24:  
  2. VOLUME SIZE OF SMALL, MW, ISRAEL, 2018 - 2030
  1. Figure 25:  
  2. VOLUME OF TIER TYPE, MW, ISRAEL, 2018 - 2030
  1. Figure 26:  
  2. VOLUME SHARE OF TIER TYPE, %, ISRAEL, 2018 - 2030
  1. Figure 27:  
  2. VOLUME SIZE OF TIER 3, MW, ISRAEL, 2018 - 2030
  1. Figure 28:  
  2. VOLUME SIZE OF TIER 4, MW, ISRAEL, 2018 - 2030
  1. Figure 29:  
  2. VOLUME OF ABSORPTION, MW, ISRAEL, 2018 - 2030
  1. Figure 30:  
  2. VOLUME SHARE OF ABSORPTION, %, ISRAEL, 2018 - 2030
  1. Figure 31:  
  2. VOLUME SIZE OF NON-UTILIZED, MW, ISRAEL, 2018 - 2030
  1. Figure 32:  
  2. VOLUME OF COLOCATION TYPE, MW, ISRAEL, 2018 - 2030
  1. Figure 33:  
  2. VOLUME SHARE OF COLOCATION TYPE, %, ISRAEL, 2018 - 2030
  1. Figure 34:  
  2. VOLUME SIZE OF HYPERSCALE, MW, ISRAEL, 2018 - 2030
  1. Figure 35:  
  2. VOLUME SIZE OF RETAIL, MW, ISRAEL, 2018 - 2030
  1. Figure 36:  
  2. VOLUME SIZE OF WHOLESALE, MW, ISRAEL, 2018 - 2030
  1. Figure 37:  
  2. VOLUME OF END USER, MW, ISRAEL, 2018 - 2030
  1. Figure 38:  
  2. VOLUME SHARE OF END USER, %, ISRAEL, 2018 - 2030
  1. Figure 39:  
  2. VOLUME SIZE OF BFSI, MW, ISRAEL, 2018 - 2030
  1. Figure 40:  
  2. VOLUME SIZE OF CLOUD, MW, ISRAEL, 2018 - 2030
  1. Figure 41:  
  2. VOLUME SIZE OF E-COMMERCE, MW, ISRAEL, 2018 - 2030
  1. Figure 42:  
  2. VOLUME SIZE OF GOVERNMENT, MW, ISRAEL, 2018 - 2030
  1. Figure 43:  
  2. VOLUME SIZE OF MANUFACTURING, MW, ISRAEL, 2018 - 2030
  1. Figure 44:  
  2. VOLUME SIZE OF MEDIA & ENTERTAINMENT, MW, ISRAEL, 2018 - 2030
  1. Figure 45:  
  2. VOLUME SIZE OF TELECOM, MW, ISRAEL, 2018 - 2030
  1. Figure 46:  
  2. VOLUME SIZE OF OTHER END USER, MW, ISRAEL, 2018 - 2030
  1. Figure 47:  
  2. VOLUME SHARE OF MAJOR PLAYERS, %, ISRAEL

Israel Data Center Market Report Scope

Tel Aviv are covered as segments by Hotspot. Large, Massive, Medium, Mega, Small are covered as segments by Data Center Size. Tier 3, Tier 4 are covered as segments by Tier Type. Non-Utilized, Utilized are covered as segments by Absorption.
By Data Center Size
Large
Massive
Medium
Mega
Small
By Tier Type
Tier 1 and 2
Tier 3
Tier 4
By Data Center Type
Hyperscale/Self-built
Enterprise/Edge
Colocation Non-Utilized
Utilized Retail Colocation
Wholesale Colocation
By End User
BFSI
IT and ITES
E-Commerce
Government
Manufacturing
Media and Entertainment
Telecom
Other End Users
By Hotspot
Tel Aviv
Rosh HaAyin
Rest of Israel
By Data Center Size Large
Massive
Medium
Mega
Small
By Tier Type Tier 1 and 2
Tier 3
Tier 4
By Data Center Type Hyperscale/Self-built
Enterprise/Edge
Colocation Non-Utilized
Utilized Retail Colocation
Wholesale Colocation
By End User BFSI
IT and ITES
E-Commerce
Government
Manufacturing
Media and Entertainment
Telecom
Other End Users
By Hotspot Tel Aviv
Rosh HaAyin
Rest of Israel
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Market Definition

  • IT LOAD CAPACITY - The IT load capacity or installed capacity, refers to the amount of energy consumed by servers and network equipments placed in a rack installed. It is measured in megawatt (MW).
  • ABSORPTION RATE - It denotes the extend to which the data center capacity has been leased out. For instance, a 100 MW DC has leased out 75 MW, then absorption rate would be 75%. It is also referred as utilization rate and leased-out capacity.
  • RAISED FLOOR SPACE - It is an elevated space build over the floor. This gap between the original floor and the elevated floor is used to accommodate wiring, cooling, and other data center equipment. This arrangement assist in having proper wiring and cooling infrastructure. It is measured in square feet (ft^2).
  • DATA CENTER SIZE - Data Center Size is segmented based on the raised floor space allocated to the data center facilities. Mega DC - # of Racks must be more than 9000 or RFS (raised floor space) must be more than 225001 Sq. ft; Massive DC - # of Racks must be in between 9000 and 3001 or RFS must be in between 225000 Sq. ft and 75001 Sq. ft; Large DC - # of Racks must be in between 3000 and 801 or RFS must be in between 75000 Sq. ft and 20001 Sq. ft; Medium DC # of Racks must be in between 800 and 201 or RFS must be in between 20000 Sq. ft and 5001 Sq. ft; Small DC - # of Racks must be less than 200 or RFS must be less than 5000 Sq. ft.
  • TIER TYPE - According to Uptime Institute the data centers are classified into four tiers based on the proficiencies of redundant equipment of the data center infrastructure. In this segment the data center are segmented as Tier 1,Tier 2, Tier 3 and Tier 4.
  • COLOCATION TYPE - The segment is segregated into 3 categories namely Retail, Wholesale and Hyperscale Colocation service. The categorization is done based on the amount of IT load leased out to potential customers. Retail colocation service has leased capacity less than 250 kW; Wholesale colocation services has leased capacity between 251 kW and 4 MW and Hyperscale colocation services has leased capacity more than 4 MW.
  • END CONSUMERS - The Data Center Market operates on a B2B basis. BFSI, Government, Cloud Operators, Media and Entertainment, E-Commerce, Telecom and Manufacturing are the major end-consumers in the market studied. The scope only includes colocation service operators catering to the increasing digitalization of the end-user industries.
Keyword Definition
Rack Unit Generally referred as U or RU, it is the unit of measurement for the server unit housed in the racks in the data center. 1U is equal to 1.75 inches.
Rack Density It defines the amount of power consumed by the equipment and server housed in a rack. It is measured in kilowatt (kW). This factor plays a critical role in data center design and, cooling and power planning.
IT Load Capacity The IT load capacity or installed capacity, refers to the amount of energy consumed by servers and network equipment placed in a rack installed. It is measured in megawatt (MW).
Absorption Rate It denotes how much of the data center capacity has been leased out. For instance, if a 100 MW DC has leased out 75 MW, then the absorption rate would be 75%. It is also referred to as utilization rate and leased-out capacity.
Raised Floor Space It is an elevated space built over the floor. This gap between the original floor and the elevated floor is used to accommodate wiring, cooling, and other data center equipment. This arrangement assists in having proper wiring and cooling infrastructure. It is measured in square feet/meter.
Computer Room Air Conditioner (CRAC) It is a device used to monitor and maintain the temperature, air circulation, and humidity inside the server room in the data center.
Aisle It is the open space between the rows of racks. This open space is critical for maintaining the optimal temperature (20-25 °C) in the server room. There are primarily two aisles inside the server room, a hot aisle and a cold aisle.
Cold Aisle It is the aisle wherein the front of the rack faces the aisle. Here, chilled air is directed into the aisle so that it can enter the front of the racks and maintain the temperature.
Hot Aisle It is the aisle where the back of the racks faces the aisle. Here, the heat dissipated from the equipment’s in the rack is directed to the outlet vent of the CRAC.
Critical Load It includes the servers and other computer equipment whose uptime is critical for data center operation.
Power Usage Effectiveness (PUE) It is a metric which defines the efficiency of a data center. It is calculated by: (𝑇𝑜𝑡𝑎𝑙 𝐷𝑎𝑡𝑎 𝐶𝑒𝑛𝑡𝑒𝑟 𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛)/(𝑇𝑜𝑡𝑎𝑙 𝐼𝑇 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛). Further, a data center with a PUE of 1.2-1.5 is considered highly efficient, whereas, a data center with a PUE >2 is considered highly inefficient.
Redundancy It is defined as a system design wherein additional component (UPS, generators, CRAC) is added so that in case of power outage, equipment failure, the IT equipment should not be affected.
Uninterruptible Power Supply (UPS) It is a device that is connected in series with the utility power supply, storing energy in batteries such that the supply from UPS is continuous to IT equipment even during utility power is snapped. The UPS primarily supports the IT equipment only.
Generators Just like UPS, generators are placed in the data center to ensure an uninterrupted power supply, avoiding downtime. Data center facilities have diesel generators and commonly, 48-hour diesel is stored in the facility to prevent disruption.
N It denotes the tools and equipment required for a data center to function at full load. Only "N" indicates that there is no backup to the equipment in the event of any failure.
N+1 Referred to as 'Need plus one', it denotes the additional equipment setup available to avoid downtime in case of failure. A data center is considered N+1 when there is one additional unit for every 4 components. For instance, if a data center has 4 UPS systems, then for to achieve N+1, an additional UPS system would be required.
2N It refers to fully redundant design wherein two independent power distribution system is deployed. Therefore, in the event of a complete failure of one distribution system, the other system will still supply power to the data center.
In-Row Cooling It is the cooling design system installed between racks in a row where it draws warm air from the hot aisle and supplies cool air to the cold aisle, thereby maintaining the temperature.
Tier 1 Tier classification determines the preparedness of a data center facility to sustain data center operation. A data center is classified as Tier 1 data center when it has a non-redundant (N) power component (UPS, generators), cooling components, and power distribution system (from utility power grids). The Tier 1 data center has an uptime of 99.67% and an annual downtime of <28.8 hours.
Tier 2 A data center is classified as Tier 2 data center when it has a redundant power and cooling components (N+1) and a single non-redundant distribution system. Redundant components include extra generators, UPS, chillers, heat rejection equipment, and fuel tanks. The Tier 2 data center has an uptime of 99.74% and an annual downtime of <22 hours.
Tier 3 A data center having redundant power and cooling components and multiple power distribution systems is referred to as a Tier 3 data center. The facility is resistant to planned (facility maintenance) and unplanned (power outage, cooling failure) disruption. The Tier 3 data center has an uptime of 99.98% and an annual downtime of <1.6 hours.
Tier 4 It is the most tolerant type of data center. A Tier 4 data center has multiple, independent redundant power and cooling components and multiple power distribution paths. All IT equipment are dual powered, making them fault tolerant in case of any disruption, thereby ensuring interrupted operation. The Tier 4 data center has an uptime of 99.74% and an annual downtime of <26.3 minutes.
Small Data Center Data center that has floor space area of ≤ 5,000 Sq. ft or the number of racks that can be installed is ≤ 200 is classified as a small data center.
Medium Data Center Data center which has floor space area between 5,001-20,000 Sq. ft, or the number of racks that can be installed is between 201-800, is classified as a medium data center.
Large Data Center Data center which has floor space area between 20,001-75,000 Sq. ft, or the number of racks that can be installed is between 801-3,000, is classified as a large data center.
Massive Data Center Data center which has floor space area between 75,001-225,000 Sq. ft, or the number of racks that can be installed is between 3001-9,000, is classified as a massive data center.
Mega Data Center Data center that has a floor space area of ≥ 225,001 Sq. ft or the number of racks that can be installed is ≥ 9001 is classified as a mega data center.
Retail Colocation It refers to those customers who have a capacity requirement of 250 kW or less. These services are majorly opted by small and medium enterprises (SMEs).
Wholesale Colocation It refers to those customers who have a capacity requirement between 250 kW to 4 MW. These services are majorly opted by medium to large enterprises.
Hyperscale Colocation It refers to those customers who have a capacity requirement greater than 4 MW. The hyperscale demand primarily originates from large-scale cloud players, IT companies, BFSI, and OTT players (like Netflix, Hulu, and HBO+).
Mobile Data Speed It is the mobile internet speed a user experiences via their smartphones. This speed is primarily dependent on the carrier technology being used in the smartphone. The carrier technologies available in the market are 2G, 3G, 4G, and 5G, where 2G provides the slowest speed while 5G is the fastest.
Fiber Connectivity Network It is a network of optical fiber cables deployed across the country, connecting rural and urban regions with high-speed internet connection. It is measured in kilometer (km).
Data Traffic per Smartphone It is a measure of average data consumption by a smartphone user in a month. It is measured in gigabyte (GB).
Broadband Data Speed It is the internet speed that is supplied over the fixed cable connection. Commonly, copper cable and optic fiber cable are used in both residential and commercial use. Here, optic cable fiber provides faster internet speed than copper cable.
Submarine Cable A submarine cable is a fiber optic cable laid down at two or more landing points. Through this cable, communication and internet connectivity between countries across the globe is established. These cables can transmit 100-200 terabits per second (Tbps) from one point to another.
Carbon Footprint It is the measure of carbon dioxide generated during the regular operation of a data center. Since, coal, and oil & gas are the primary source of power generation, consumption of this power contributes to carbon emissions. Data center operators are incorporating renewable energy sources to curb the carbon footprint emerging in their facilities.
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Research Methodology

Mordor Intelligence follows a four-step methodology in all our reports.

  • Step-1: Identify Key Variables: In order to build a robust forecasting methodology, the variables and factors identified in Step-1 are tested against available historical market numbers. Through an iterative process, the variables required for market forecast are set and the model is built on the basis of these variables.
  • Step-2: Build a Market Model: Market-size estimations for the forecast years are in nominal terms. Inflation is not a part of the pricing, and the average selling price (ASP) is kept constant throughout the forecast period for each country.
  • Step-3: Validate and Finalize: In this important step, all market numbers, variables and analyst calls are validated through an extensive network of primary research experts from the market studied. The respondents are selected across levels and functions to generate a holistic picture of the market studied.
  • Step-4: Research Outputs: Syndicated Reports, Custom Consulting Assignments, Databases & Subscription Platforms
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