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The data center market size is forecast to increase by USD 434.8 billion, at a CAGR of 14.52% between 2023 and 2028. Market growth hinges on several factors, including the increasing adoption of multi-cloud and network upgrades to support 5G technology, the demand planning and expansion initiatives by hyper scalers, and the rising demand among SMEs. Multi-cloud adoption and network upgrades are vital for accommodating the demands of 5G technology, driving investments in data center IT infrastructure to enhance capacity and connectivity. Additionally, hyper scalers' demand planning and expansion efforts contribute to market growth by driving investments in data center construction and operation. Furthermore, the growing demand from SMEs for data storage and processing capabilities fuels market expansion, as businesses increasingly rely on data-driven decision-making and digital operations. Data centers serve as centralized facilities for computing, processing, and storage, playing a critical role in supporting the evolving needs of businesses and technology advancements. The data center market analysis report also includes an in-depth analysis of market trends and analysis, market growth analysis and challenges. Furthermore, the data center market report includes historic market data from 2018 - 2022.
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The data center market is witnessing a profound transformation driven by advancements in machine learning, Internet of Things (IoT), and cloud computing. From traditional on-premises infrastructure to the scalability and flexibility offered by cloud technology, businesses are embracing digitalization to meet evolving customer needs. Edge computing enables real-time data processing, crucial for industries like online retail and e-commerce where speed and personalized data are paramount. Cloud and edge computing solutions not only optimize data center workloads but also mitigate risks associated with lost data. Moreover, with the proliferation of Internet of Things devices, efficient data center systems ensure seamless storing and analyzing of data, facilitating cost savings and enhancing customer experiences in the era of digital transformation. Our researchers analyzed the market research and growth data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rise in the adoption of multi-cloud and network upgrades to support 5G equipment is notably driving market growth. Its highly capital-intensive business facilities, with investments upward of a billion. The stakeholders used to the building and construction industry face immense pressure to adhere to timelines and start operations as soon as possible. At this time, market and costs per megawatt are the key indicators considered for facility's design and construction process. Meeting contractual schedules and performance requirements are major challenges for data center market growth. The delay in developing a generally occurs due to government inactions, public opposition, inability to obtain financing, weather conditions, industrial accidents, and labor disruptions.
Moreover, the market has witnessed unprecedented demand in 2021-2022 as businesses increase investments to upgrade IT sector and shift toward cloud services. Enterprises purchase server configurations supporting big data analytics, AI (artificial intelligence), and software-defined infrastructure. However, a shortage in the supply of server components from the supplier side renders it difficult for vendors to meet the demand. The shortage of server components also created an issue in lead times (the period between server order booking and server delivery) for some of the server vendor's channel partners (from 30 days to 3 months). Such issues can delay the launch of servers in the market, resulting in operators incurring additional costs, which may hamper data center growth during the forecast period.
Increased adoption of HPC across enterprises is a key trend in the data center industry. HPC is a combination of processes for delivering higher and more efficient performance in computing. Usually, HPC systems are a cluster of processors with 16-64 nodes. They use algorithms, networks, and simulated computer environments, ranging from small cluster computers to large supercomputers. HPC systems are primarily used for scientific and engineering applications. They have a high level of computing performance compared with general-purpose computers. The performance of HPC systems is measured in floating-point operations per second (FLOPS) instead of million instructions (MIPS). HPC systems aid in solving recurring problems and complex operations much faster and more efficiently for applications such as physical simulations, weather forecasting, quantum mechanics, and molecular modelling.
In addition, the increasing need to establish product innovation and economic competitiveness drives the demand for HPC. HPC systems are mainly used by aerospace and defense companies, governments, laboratories, and research centers. Supercomputers incorporate tens of thousands of processors that can perform billions and trillions of computations or calculations per second. To perform these calculations efficiently, HPC systems need highly configured servers that can handle compute-intensive workloads. The rising use of HPC systems will continue to increase the demand for high-performance, These factors impact the development of data center market growth and trends during the forecast period.
Increasing power consumption is a challenge to data center market growth. Due to a rise in internet penetration, the growing use of social networking, the improvement of automation technologies, smart city initiatives, and the implementation of AI across industries are driving investments. Globally, it will account for nearly 4% of the world's electricity consumption in 2022. This number is expected to double by the end of the forecast period. In the market, servers and cooling solutions account for a major share of electricity consumption.
Moreover, most developed nations, such as the US, the UK, Japan, and emerging countries, observe significant power production and consumption gaps. Large-sized are used by multiple enterprises, and millions of users need to be powered continuously to ensure business continuity. The construction of globally is increasing yearly, which raises the risk of power shortage during the forecast period. Vendors are also moving toward modernizing. The installation of intelligent infrastructure systems, such as automation software, DCIM solutions, and energy-efficient power equipment, will gain popularity during the forecast period. Moreover, enterprises are slowly moving toward energy-efficient infrastructure models for construction. This shift toward greener energy sources and the focus on reducing carbon emissions can hinder data center growth during the forecast period.
The data center market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration as well as data center growth projections. Furthermore, the data center industry report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
The data center growth projections also include detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market share growth by the IT infrastructure segment will be significant during the forecast period. IT infrastructure segment includes server infrastructure, storage infrastructure, software-defined network infrastructure, converged infrastructure, backup and recovery software, automation software, and infrastructure management (DCIM) solutions. The use of demand for computing power and storage to support the growth in data traffic. Enterprises globally have embraced cloud technologies and are moving their data from on-premises to cloud-based. This trend is expected to continue during the forecast period to create demand for servers, storage infrastructure, and other IT equipment.
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The IT Infrastructure segment was valued at a market share of USD 171.96 billion in 2018. The major reason for the growth of these segments is the rise in investments in hyperscale data centers (HDCs). This segment is growing due to the expansion of green data centers, colocation data centers, and HDCs, increased capacity as well as the adoption of advanced virtualization technologies which will accelerate the growth of the global market during the forecast period.
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North America is estimated to contribute 36% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. In this region, enterprises are increasingly adopting cloud solutions from hyper-scale providers such as AWS, Microsoft, and Oracle to meet computing capacity requirements with minimum expenditure. Also, the region has several already established by enterprises. For instance, Apple Inc. (Apple) has all 11 centre of which six are located in this region.
Moreover, real-estate enterprises are supporting the growth of the market in North America. and the US, also followed by countries such as Canada, has been at the forefront of driving the adoption of new technologies, and this trend is expected to result in market growth analysis.
The data center market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The market is at the forefront of innovation, driven by factors such as autonomous vehicles, IoT devices, and the emergence of smart cities. Enterprises, including B2B enterprises and individuals, rely on Enterprise Engineering Solutions and robust Software Testing Help to optimize application performance and meet storage requirements. With the rise of decentralized Data Centers and managed hosting, businesses navigate data sovereignty regulations and data security concerns. Investment in digital infrastructure is propelled by macroeconomic factors and the demand for digital economy solutions. In addition, talent management software is increasingly being deployed in data centers to optimize the management of IT personnel, streamline recruitment processes, and enhance workforce productivity and skills development in this critical infrastructure sector. The market's growth is fueled by the exponential rise in internet usage and mobile data use, driving the adoption of cloud data storage and public cloud services. Amidst exchange rate fluctuations, business leaders leverage hyper-scale platforms like Amazon Web Services to ensure latency-sensitive operations and maintain intelligent buildings in specialized regions.
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Market Scope |
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Report Coverage |
Details |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 14.52% |
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Market Growth 2024-2028 |
USD 434.8 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
12.38 |
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Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
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Performing market contribution |
North America at 36% |
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Key countries |
US, Germany, UK, China, and Canada |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
365 Data Centers, Alphabet Inc., Amazon.com Inc., Apple Inc., China Telecom Corp. Ltd., Cisco Systems Inc., CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., Equinix Inc., Hewlett Packard Enterprise Co., Intel Corp., International Business Machines Corp., KDDI Corp., Microsoft Corp., Nippon Telegraph and Telephone Corp., Oracle Corp., Salesforce Inc., SAP SE, and Verizon Communications Inc. |
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Market dynamics |
Parent market analysis, Market forecast, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
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Customization purview |
If our data center market analysis report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this data center market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Component
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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