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The Colocation Industry has experienced excellent growth in the past five years. The success can be attributed to an increased percentage of services offered online.
A recent report released by IBIS world has shown the Colocation Industry has experienced excellent growth in the past five years. The success of the colocation market can be attributed to an increased percentage of services offered online. Companies large and small have invested heavily in dedicated servers and other related computer hardware. In an effort to cut costs companies have turned to Colocation Providers to house their precious data. While the demand for colocation services has driven up revenue for the industry, it has also depleted the total amount of space available to clients.
According to IBIS, online services have grown at an average annual rate of 3.5 percent. Investments in computer hardware have grown at rate of 2.7 percent respectively. These rates have allowed industry revenue to clime to roughly $18 billion in five years. The supply and demand is very cyclical in the data center industry. Earlier this year, the colocation industry expanded too rapidly and created a bit of a surplus. Heading into 2013, demand is expected to catch up and drive sales in related industries.
Utility Costs to Drive Colocation
Colocation Providers who operate efficient data centers receive reduced rates from utility companies. Given this fact, many customers will move their servers into colocation facilities to offset the cost of ownership inherent in owning power hungry equipment. Furthermore, analysts predict that colocation revenues will continue to rise yet acknowledge the fact that some will opt to house their servers in house. The reason: the advent of virtualized services like managed VPS hosting for example, have made it more affordable for individuals to manage their data in house. Not only that, but the cost of servers and related hardware is expected to come down as well. Despite this however, the financial outlook for the Colocation Industry will continue to hold its own, now and in the future.