Modular Data Center Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

The global modular data center market was valued at USD 21.65 billion in 2020, and it is expected to reach a value of USD 89.9 billion by 2026, registering a CAGR of 27.35% over the forecast period of 2021-2026. Modular data center solution units facilitate the physical build of IT infrastructure. The modular approach can be focused on the data center level or at a more granular level. As the organizations move toward adopting more cloud-based distributed technologies, modular architecture can support additional workload to support business demands. These portable data centers are offering a cost-effective way of secure computing power without adding extra floor space, to meet the rising demand for cloud, mobile, and social analytics.

• The mobility and scalability of modular data centers are driving the market. The mobility of modular data centers enables clients to relocate their data centers, rather than demolishing them and constructing a new one at a new site. For more than 40% of the organizations, scalability is one of the top challenges faced. The flexibility of the modular data centers, due to having the modules, can be replaced easily when they are obsolete, or there is a need for updated technology. Scalability provides the users with the building blocks to add capacity to their systems in timely intervals and pay-as-one-grow. This capacity-on-demand approach allows organizations to meet the fluctuating demands quickly.
• Further, the cooling units that are used in advanced modular data centers cool more effectively than traditional computer room air conditioning units. According to data from Building Industry Consulting Service International, (BICSI) modular data centers offer 40% greater energy efficiency than an open data center environment.
• Disaster recovery advantages significantly drive the market growth. While there are organizations that take a modular approach to their data centers for the purposes of capacity planning, there are other organizations like the large organizations that leverage modular data centers for their disaster recovery operations. According to a recent survey of 110 US-based IT decision-makers, US Signal's "2020 State of Data Center Offerings" report, security and compliance, backup and disaster recovery, and network availability are the top factors considered while selecting a third-party edge data center provider.
• Among the respondents, some 42% of those surveyed stated that disaster recovery and backup availability are the key factors considered for evaluating edge data center providers. A full 66% reported that they currently use backup and disaster recovery services from an edge data center provider. However, some 54% admitted that they are only somewhat confident or not very confident in their disaster recovery and backup solution, especially in the wake of cyberattacks, IT outages, or natural disasters.
• Further, the COVID-19 pandemic has posed an additional effect on the overall economy across sectors. It is also to pave the way for the digital economy. Alibaba Cloud, China’s top cloud computing provider, is investing significantly in building next-generation data centers to support the needs of digital transformation in the post-pandemic situation. In April 2020, AlibabaCloud announced that it would invest RMB 200 billion in core technologies and the construction of future-oriented data centers in the next three years.
• Also, the move to work from home during the outbreak of COVID-19 and the consequent demand for software-as-a-service (SaaS) are the factors that drive the traffic to data centers.

Scope of the Report

A modular data center is portable and exists at any location that requires data capacity. This type of data center system comprises modules and components with purpose-engineering. Applications, such as disaster backup, high performance/ edge computing, data center expansion, starter data centers, are considered under the scope. The end-users of the modular data centers, such as IT, telecom, BFSI, government, and others, are part of the study.

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Key Market Trends

Telecom Sector to Hold Significant Market Growth

• The telecom providers, to optimize their networks and the digital services running on them, are going to need more compute and storage capacity to be deployed across carrier networks. Additionally, the increasing 4G penetration and the upcoming 5G wave are further motivating telecom vendors to invest in the modular data center market for more network functionality and a much higher ability to manage networks around the edges due to high data traffic.
• As carriers can be benefitted in terms of network service optimization, edge computing has become almost a common practice in the telecom industry. The telecom operators are estimated to deploy micro modular data centers, along with 5G cell towers, in order to provide enterprises across industries better network connectivity.
• For instance, according to the Ericsson Mobility report, in the North American region, 5G subscriptions are expected to account for 55% of mobile subscriptions by the end of 2024. As 5G has to ensure higher speeds and lower latency, telecom vendors would turn toward edge computing.​
• In December 2019, Amazon Web Services and Verizon announced a partnership called 5G edge cloud computing to help build new applications, IoT-empowered capabilities, and net-new value innovations. Verizon would be offering secure connections to AWS’s nearby cloud data centers (edge gateways), so one can tie in its compute and storage services through its 5G network.​
• Since the advent of the internet, telecommunication has been one of the major driving forces behind global development and value creation. Recently, there have been many changes occurring in the telecommunications industry, which can easily be attributed to the advancement in technology. High rates of growth are being forecast for this fastest-growing market.
• The recent telecom operator to deploy a modular data center is T-mobile. The deployment of the modular data center was commissioned by Emerson Network Power and was in line with the industry’s trend to consolidate its data center infrastructure to maintain the operating costs and reduce carbon footprint.
• In India, after the emergence of network provider Reliance Jio, the data consumption in the country increased and reached 9.8 GB per month. Moreover, the Swedish telecom equipment maker Ericsson has stated that the usage would be doubled to 18 GB per month by 2024.​ Moreover, with the upcoming 5G technology, the consumption rate is expected to increase, along with the need for effective data storage facilities in the industry.​

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