This year has seen some big trends in the data centre industry. While security has remained most prominent in the news, there has also been a considerable amount of consolidation going on in the data centre market as well.
While
Equinix's acquisition of Telecity was widely reported, other changes went mostly unnoticed.
Interoutes purchase of Easynet didn't make headlines and nor did
Virtus expanding its business by buying up Inifinitys data centres.
So why is this consolidation happening?
The answer is relatively straight forward, cloud. Several years ago, in anticipation of an increase in demand for data centre services, everyone was rushing out to buy or build warehouse scale data centres.
But then cloud happened and the size of IT estates shrank. Customers still needed data centre space but instead of 30 or 40 racks they only wanted 2 or 3.
After years of unsuccessfully trying to sell floor space, many medium sized operators are now getting out of the data centre business. One of the first casualties was SSE who
sold off their flagship facility in Fareham. Elsewhere
Century Link and
Rackspace are both looking for buyers for their data centre businesses as their colocation revenues continue to shrink.
While some operators, such as
ATOS, are looking to form partnerships to open up opportunities in the hope of fending off the inevitable, the trend of market consolidation looks set to continue.
So what does this mean for the future?
Consolidation will have little impact in the short term, as we will see trends like the internet of things increase demand for data centre services.
However, in the longer term, it will mean fewer options in the market and as those operators compete for dwindling capacity in power and communication networks, the bigger players will force more smaller operators out of the market.
This will undoubtedly drive up the costs for IT services and with the
UK already one of the most expensive markets for data centre space, this can only be bad news.
