CF20: 2024's 20 Top Data Center Colo Providers — Equinix, Flexential, More

Data center colocation providers are experiencing high demand driven by accelerating cloud adoption and more.

With colocation, you own your server and have full control over it, but it’s stored at a host's data center, unlike managed hosting, in which you don’t own the server.

The data center colocation market is experiencing significant growth due to increasing investments in hyperscale data centers, according to Technavio. With a smarter supply chain, the creation of vast amounts of data requires efficient processing. Hyperscale data centers are becoming a priority to manage this flood of data.

In addition, the adoption of cloud computing is driving the market as organizations seek to reduce their capital and operating expenses by leveraging cloud solutions.

This is our third annual “CF20 List” focused on top data center colocation providers. Analysts shared their thoughts on the technology and industry. This is a new list for 2024 that features fresh viewpoints on changes in the competitive landscape.

Technavio expects the global data center colocation and managed hosting services market to exceed $163 billion by 2027, with a compound annual growth rate (CAGR) of nearly 14%. The market was worth nearly $55 billion in 2022.

Data Center Colocation a Go-To Solution

Alan Howard, principal analyst of cloud and colocation service in Omdia’s cloud and data center research practice, said hyperscale cloud providers (Amazon, Google, Meta and Microsoft) can’t build new data center capacity fast enough and aren’t necessarily interested in building in all global markets, so colocation is the go-to solution. The tier 2 cloud providers rarely build data centers, so colocation or other types of hosting like infrastructure as a service (IaaS) is where they go.

Omdia's Alan Howard

“AI is driving a lot of innovation in data centers due to the high-power density requirements, of course,” he said. “So that is creating some innovation in existing data centers and certainly in new data center builds in particular around power distribution and cooling technologies. One of the interesting trends that has really picked up the pace in the last year or so is master-planned data center campus developers that are salivating over the anticipated power and infrastructure demand anticipated for AI.”

One of the most important aspects of the competitive landscape is centered around specific emerging markets, Howard said.

“For example, sub-Saharan Africa or LATAM have attracted huge interest particularly from colocation providers, and we’ve seen both Equinix and Digital Realty making acquisitions as a market entrance strategy,” he said. “In addition, infrastructure funds like Digital Bridge have entered LATAM, for example, with a new offering and a broad footprint.”

Room for New Entrants

There’s room for new entrants in data center colocation, but it’s getting to be a crowded market and new differentiators are harder to come by for traditional colocation or hosting services, Howard said.

“The new companies that are currently trying to make the AI play, meaning lots of high-density power and space availability, are new entrants, but it will take some time to see if that business model is viable as the AI phenomenon plays out,” he said.

Forrester's Alvin Nguyen

Alvin Nguyen, senior analyst at Forrester, said increasing demand seems to be driven by a number of factors, including:

“Generative AI, and its power and cooling/water demands, has emerged as a driver for new data center builds and updates,” he said. “Regional and local laws driving data sovereignty and local staffing are starting to have an impact as well.”

Smaller Players Experimenting

There are a number of smaller players that have emerged, Nguyen said. Some experiment with new energy sources, while others experiment with new building techniques (3-D printing facilities), and some have come from adjacent markets looking for more opportunity.

“The established players are conservative after being impacted by the push towards the public cloud years ago — by keeping their data centers highly occupied (90% or more in terms of available power)," he said. "This leaves room for new upstarts who have a greater risk appetite.”

We’ve compiled a list in the slideshow above, in no particular order, of 20 top data center colocation providers. It’s based on feedback from analysts and recent news reports. This list is by no means complete. The providers are making the most of the ongoing competitive landscape and charting success.