Hyperscale Operators and Colocation Continue to Drive Huge Changes in Data Center Capacity Trends

RENO, NV, August 7, 2024

The number of large data centers operated by hyperscale companies recently passed the 1,000 milestone, and new data from Synergy Research Group shows that they now account for 41% of the worldwide capacity of all data centers. Just over half of that hyperscale capacity is now in own-built, owned data centers with the balance being in leased facilities. With non-hyperscale colocation capacity accounting for another 22% of capacity, that leaves on-premise data centers with just 37% of the total. This is in stark contrast to six years ago, when almost 60% of data center capacity was in on-premise facilities. Looking ahead to 2029, hyperscale operators will account for over 60% of all capacity, while on-premise will drop to just 20%. Over that period, the total capacity of all data centers will continue to rise rapidly, driven primarily by hyperscale capacity growing almost threefold over the next six years. While colocation share of total capacity will slowly decrease, colocation capacity will continue to rise steadily. On-premise share of the total will drop by almost three percentage points per year, though the actual capacity of on-premise data centers will remain relatively stable. The Synergy data is based on a combination of several detailed quarterly tracking research services, which enables it to build a comprehensive analysis of data center capacity, with breakouts by region, country and metro markets. The hyperscale research is based on an analysis of the data center footprint and operations of the world’s major cloud and internet service firms, including the largest operators in SaaS, IaaS, PaaS, search, social networking, e-commerce and gaming. The colocation research is based on Synergy’s in-depth tracking of the colocation market, including quarterly data on over 290 individual companies. The enterprise on-premise analysis is based on Synergy’s tracking of the data center hardware market.

“The mix of data center capacity is quite different region by region, an example being that hyperscale owned data center capacity is much more prevalent in the US than in either Europe or the APAC region. However, overall the trends are all heading in the same direction - and it is easy to see what is behind these trends. In 2012 enterprises spent twelve times as much on their data center hardware and software as they did on cloud infrastructure services, while today they spend three times more on cloud services then they do on their own data center infrastructure,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Add to that the huge growth in SaaS and consumer-oriented digital services such as social networking, e-commerce and online gaming, and the result is the burgeoning growth in hyperscale data centers. Enterprises are also choosing to house an ever-growing proportion of their data center gear in colocation facilities, further reducing the need for on-premise data center capacity. The rise of generative AI technology and services will only exacerbate those trends over the next few years, as hyperscale operators are better positioned to run AI operations than most enterprises.”