Equinix, Digital Realty and NTT – numbers one to three in the market, according to Synergy Research Group – grew 28% in 2016 in aggregate, way ahead of numbers four to 10, which grew 12%, and numbers 11-20, which grew by just 8%.
“In some senses colocation is following the same path as the cloud, with market power gradually being concentrated in the hands of a few focused and deep-pocketed operators,” said John Dinsdale, a chief analyst and research director at Synergy.
Growth in the top three is due to a combination of major acquisitions and organic growth, says Synergy.
The biggest operator, Equinix, grew at 26%, says the company, just ahead of number two, Digital Realty, which grew at 25% year-on-year. But the fastest growth is recorded by NTT, which is number three in the market, hitting 36% annual growth.
The Synergy data is based on figures from the fourth quarter of 2015 to the third quarter of 2016.
Apart from the three market leaders, other companies whose growth rates were well above average and who climbed the rankings included QTS, CyrusOne, CoreSite, China Telecom and KDDI-Telehouse.
Synergy says that consolidation will continue to be a major feature of the market, as evidenced by the recent announcement that Equinix is acquiring 29 data centres from Verizon, which is ranked second in the US retail colocation market.
The survey covers both retail and wholesale colocation. The major countries with the highest growth rates were China, Hong Kong and India, contributing to the Asia-Pacific region having the highest growth rate.
Across the major regions, Equinix was the leader in Europe, Middle East and Africa, ranked second in North America and third in Asia-Pacific. Digital Realty was the leader in North America and NTT the leader in Asia-Pacific.
Synergy notes that wholesale colocation revenues have been growing more rapidly than retail colocation, though in 2016 the growth rates were broadly similar. Equinix continues to have a strong lead in retail colocation while Digital Realty holds a similar position in wholesale colocation.
Notably, Digital Realty and NTT now have significant market shares in both the retail and wholesale sectors, while Equinix maintains a tight focus on retail operations.
Dinsdale continued the comparison with the cloud market. “In both cases the ability to run large data centre operations effectively and efficiently is vital to success,” he said. “Companies that are too diversified or unfocused will struggle. And the similarities don’t stop there – as cloud usage continues to explode, colocation growth opportunities are pulled along in the slipstream.”
