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The hyperscale data center market size is forecast to increase by USD 371.3 billion, at a CAGR of 37.58% between 2023 and 2028. The market is experiencing significant growth due to the increasing demand for IT and telecommunications services in sectors such as Entertainment media and Financial Services. The trend towards Scala Data Centers, which prioritize large data center sizes for optimal infrastructure efficiency, is a major factor driving market growth. Innovations in data center components, including advanced cooling systems and energy-efficient servers, are also contributing to the market's expansion. Consolidation of data centers is another key trend, as organizations seek to reduce costs and improve operational efficiency by housing their IT infrastructure in large, hyperscale facilities. Overall, the market is poised for continued growth, driven by the increasing need for strong and scalable IT infrastructure in various industries.
The market is experiencing significant growth due to the increasing demand for IP data traffic, driven by the proliferation of OTT applications, IoT, and big data. Cloud-based solutions, including Amazon Web Services and cloud providers, are becoming increasingly popular among businesses of all sizes, from SMEs to financial services, leading to the expansion of hyperscale data centers. The market advantages of hyperscale data centers include their ability to support large-scale cloud computing and big data analytics, as well as their infrastructure efficiency and cost savings. However, there are also market challenges and restraints, such as the high capital expenditure required for building and maintaining these large-scale facilities, as well as the need for sustainability and green initiatives, such as those being pursued by Vantage Data Centers, Centexs, and Solarvest.
The market opportunities for hyperscale data centers are vast, with the potential for growth in various sectors, including IT spending on cloud services, infrastructure components, and NGFWs. As the demand for data processing and storage continues to grow, hyperscale data centers will play a crucial role in meeting the needs of businesses and organizations around the world.
The 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 critical infrastructure segment is estimated to witness significant growth during the forecast period. The market caters to the infrastructure needs of various industries such as IT, telecom, financial services, entertainment media, and others. A critical component of these data centers is the server, which plays a pivotal role in processing user requests and transferring data. Servers consist of essential hardware, including dual power supplies, a redundant array of independent disk systems, and error-correcting code memory. Modern servers are designed to be hot-swappable, enabling seamless replacement without disrupting operations. Moreover, cooling techniques such as fans or water-cooling are employed to prevent overheating. Mission-critical servers are engineered for fault tolerance and minimal failure rates, ensuring maximum uptime for data centers.
Server management software enables remote powering, configuring, and rebooting of servers. In modern data centers, servers are also virtualized to optimize computing resources.
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The critical infrastructure segment accounted for USD 26.90 billion in 2018 and showed a gradual increase during the forecast period.
North America is estimated to contribute 35% 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.
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In North America, the IT sector, particularly in the US, dominates the market investments. The region witnesses significant growth due to the presence of major players in the tech, telecom, financial services, entertainment, and media industries. Notable companies such as Alphabet Inc. (Google), Microsoft Corp., Facebook Inc., Apple Inc., and Amazon.Com Inc. (Amazon Web Services) have established their command centers in the US. Moreover, the country hosts several data center infrastructure component companies, including Dell Technologies Inc. The rise in data center construction is accompanied by investments in sustainable power hotspots to support server farm operations. These facilities are primarily controlled by Content Delivery Networks (CDNs), colocation providers, and telecom companies.
The US remains a hub for these organizations due to its strong business environment and the presence of numerous Fortune 500 companies.
Our researchers analyzed the 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.
Rising demand for data center colocation facilities is the key driver of the market. Enterprises opting for colocation facilities instead of building their own data centers can significantly reduce capital expenditures on infrastructure and enhance the connectivity essential for operational services. Colocation refers to renting computing servers, storage, and network equipment from a third-party facility. These facilities provide private racks for enterprises to house their IT infrastructure, enabling small and medium enterprises to access modern infrastructure at affordable subscription costs. The trend toward cloud services has led to an increase in the number of colocation facilities, with many enterprises choosing to build and manage their platforms in the cloud or utilizing managed services. Moreover, the growing emphasis on sustainability and green initiatives in the IT industry has led to the development of green data centers, such as Solarvest and Centexs, which utilize renewable energy sources like solar power to reduce carbon emissions.
This shift towards e-commerce and cloud services is expected to drive the growth of the colocation market in the retail sector.
Growing infrastructure innovations is the upcoming trend in the market. The market has witnessed significant advancements in IT infrastructure over the past decade. IT spending on cloud services continues to increase, driving the demand for more efficient and sustainable data centers. Green data centers, such as those utilizing solar power from companies like Solarvest and Centexs, are gaining popularity due to their environmental benefits. In terms of hardware, there is a shift towards microservers replacing blade servers, and flash storage with 100 Gb of Ethernet for networking. Cooling techniques, including free cooling, aisle containment, and liquid immersion cooling, are being employed to minimize heat exhaustion from IT equipment. Rack innovations include improved flexibility, in-rack cooling installations, and advanced PDUs and UPS systems, all aimed at enhancing performance and cable management.
Consolidation of data centers is a key challenge affecting market growth. Enterprises are increasingly focusing on data center consolidation to minimize costs, enhance security, and boost overall efficiency. This trend is particularly prevalent in the IT sector, where cloud services have become a priority for businesses. Consolidation can lead to cost savings of up to 30%, a 55% reduction in power consumption, and an improvement in security by up to 35%. The US federal government is also embracing this approach to cut operational costs and invest in an efficient computing platform. Virtualization technology, which is commonly used in IT infrastructure, plays a significant role in this consolidation. It enables servers, storage, and network equipment to operate on a single computing hardware, thereby reducing capital expenditures (CAPEX) and operational expenditures (OPEX) substantially.
Sustainability is another critical factor driving the data center market, with the growing emphasis on green data centers. Companies like Solarvest and Centexs are leading the way in this area, implementing renewable energy solutions such as solar power to reduce carbon emissions and promote energy efficiency. Retail e-commerce and other industries that rely heavily on IT spending are expected to fuel the growth of the market in the coming years.
The 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. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
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.
Intel Corp. - The company offers hyperscale data centers with the Intel rack scale design. It also focuses on providing workload-optimized platforms and related products for data centers in enterprise, cloud, and communication infrastructure market segments.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key 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 is witnessing significant growth due to the increasing IP data traffic from OTT applications, IoT devices, and big data analytics. Cloud-based solutions are becoming increasingly popular among Small and Medium-sized Enterprises (SMEs) in various industries such as retail e-commerce, IT telecom, entertainment media, financial services, and more. The market is driven by the advantages of cloud computing, including cost savings, flexibility, and scalability. However, the market faces challenges such as high capital expenditure and operating expenses, market restraints from regulatory compliance, and market challenges from energy consumption and sustainability concerns. Green data centers, utilizing renewable energy sources like solar and wind, are gaining popularity to address these challenges.
Further, key components of hyperscale data centers include Network Gateway Firewalls (NGFWs) and cloud providers offering infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). Hadoop, OVHcloud, Atempo Group, and Miria Platform are some of the infrastructure components used in hyperscale data centers. The market is expected to grow at a steady pace, offering numerous opportunities for infrastructure providers and component manufacturers.
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Market Scope |
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Report Coverage |
Details |
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Page number |
184 |
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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 37.58% |
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Market Growth 2024-2028 |
USD 371.3 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
27.51 |
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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 35% |
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Key countries |
US, China, India, UK, and Germany |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Alphabet Inc., Amazon.com Inc., Broadcom Inc., Cisco Systems Inc., CtrlS Datacenters Ltd., CyrusOne LLC, Dell Technologies Inc., Equinix Inc., Hewlett Packard Enterprise Co., Inspur Systems Inc., Intel Corp., International Business Machines Corp., Microsoft Corp., Nippon Telegraph and Telephone Corp., NVIDIA Corp., Oracle Corp., QTS Realty Trust LLC, Schneider Electric SE, Telefonaktiebolaget LM Ericsson, and Viavi Solutions Inc. |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, 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 market 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 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 Type
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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