Issue link: https://cp.revolio.com/i/786813
4 | THE DATA CENTER JOURNAL www.datacenterjournal.com P articularly for com- panies that want to outsource IT without completely relinquishing control of IT hardware, this option is appealing. And because it's increasingly commingling with the cloud, colocation has the potential for strong growth by riding the cloud- adoption wave. WHAT'S IN A NAME? As the market provides more op- tions to meet a particular demand—in this case, IT—categorization can become difficult. What was once a clearly defined market segment may blur as it "borrows" technologies or business tactics from other segments. Even if it changes over time, a service- able definition is nevertheless helpful in evaluating the state of the market today. A number of trends are causing the boundaries of colocation to shi or become unclear, but the heart of this approach to IT is still a model that amortizes facilities costs across multiple customers and is thereby able to achieve economies of scale. In her Cloud + Colo Data Centers Report – 2016, IHS Markit analyst Liz Cruz offers the following definition: "We define multi-tenant data centers as those data centers that provide space, power, connectivity, security, and environmental controls to end users which, in-turn, provide their own IT gear (servers, storage, switching)." She further notes that although multitenant and colocation are oen used synonymously, the lat- ter may apply specifically to the retail segment whereas the former is more general. One question with regard to this definition, then, is who exactly constitutes the end users—in par- ticular, retail versus wholesale. Cruz, who is also Associate Director of Data Centers, Cloud and IT Infrastructure for IHS Markit, said this distinction has blurred in recent years. "Digi- tal Realty was the best example of a pure wholesale provider, but it has now acquired the retail-focused Telx. Similarly, Equinix, the prime example of a retail provider, began to offer me- tered power and data center suites in addition to becoming a REIT, which is a traditionally wholesale status. Wholesale providers once focused on offerings greater than 250/300kWk, but many now deliver services that address customer needs both above and below this mark." e difference between retail and wholesale may or may not be relevant depending on the market metric of interest, but for this discussion, a broad view is sufficient. For that same reason, the terms colo- cation and multitenant can effectively be synonymous. MARKET SIZE In the market for outsourced (as opposed to in-house) data centers, the cloud and colocation differ primarily in who controls the IT infrastruc- ture proper. Despite that important distinction, separating these segments to evaluate their size is difficult. Cruz estimates that cloud and colocation providers together constitute 40% of worldwide data center space. Never- theless, "It's very hard to accurately divide out the portion that is cloud versus colo, since many cloud provid- ers now house their data center infra- structure in colocation facilities and because many colocation providers also offer cloud services (and do not clearly set aside floor space for colo versus cloud space)." She expects that when including in the colocation tally any cloud providers that colocate their physical infrastructure, the division is about 50-50: approximately 20% of worldwide data center space is coloca- tion and 20% cloud. Additionally, as outsourced IT gains a stronger reputation for security and stability, and as more companies adopt such approaches, growth will be the natural result. A balancing factor, however, is whether colocation and cloud customers truly garner cost sav- ings over the long term. An early jus- tification for outsourcing to the cloud, for instance, was that the pay-as-you- In her Cloud + Colo Data Centers Report – 2016, IHS Markit analyst Liz Cruz offers the following definition: "We define multi-tenant data centers as those data centers that provide space, power, connectivity, security, and environmental controls to end users which, in-turn, provide their own IT gear (servers, storage, switching)." She further notes that although multitenant and colocation are often used synonymously, the latter may apply specifically to the retail segment whereas the former is more general.