Data Center Market Size, Share & Trends Analysis Report By Component, By Type, By Server Rack Density, By Redundancy, By PUE, By Design, By Tier Level, By Enterprise Size, By End-use, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global data center market size was valued at USD 194.81 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 10.9% from 2023 to 2030. There has been a growing demand for technology advancements, cloud computing adoption, digital services, data storage needs, regulatory requirements, expanding user base, and business scalability across regions. These aspects together emerge the need for more storage capacity, efficient infrastructure, and computing power to accommodate the increasing volume of information and online activities. This growing demand has collectively resulted in growing global market demand.

Further, with the increasing focus on enhancing sustainability, many businesses are adopting energy-efficient solutions, leading to the demand for green data centers across countries. The rising pressure from government and regulatory bodies towards forming stringent laws and rules to protect the climate and achieve environmental sustainability has emerged the need for green data centers, thereby boosting the demand for the overall market during the forecast period. Green data centers mainly use renewable energy sources like solar, wind, and hydroelectric electricity to lessen their dependency on non-renewable fossil fuels. Energy-efficient solutions lead to significant cost savings for data center operators.

The rollout of the 5G network enhances data transmission speeds and allows new applications, leading to a surge in demand for data center infrastructure to operate the growing data traffic. This wireless technology requires enhanced speed for faster downloads, quicker access, and smoother streaming to online services, thereby forming demand for higher speeds data centers across regions. Moreover, cloud services require robust data centers to manage and host applications and computing resources. The cloud providers are focused on offering edge computing services, which require smaller data centers or edge locations near users, thereby surging demand for the micro data center. The widespread adoption of cloud services across small & medium enterprises and large enterprises drives the market's growth.

Moreover, the growing popularity of portable, compact, and modularized data centers is anticipated to form a huge base for micro data centers. With data centers near devices or users, micro data centers reduce latency, vital for applications requiring instant responses, such as industrial automation or autonomous vehicles. Further, micro data centers can be easily deployed or scaled based on the requirement, allowing enterprises to respond quickly to customer demands without additional expenses. This growing micro data center demand is expected to form future opportunities for the market.

However, the high initial cost required to build and design data centers is anticipated to hinder the demand for the market. The equipped data centers include substantial capital expenditure for construction, land, power infrastructure, and cooling systems. Also, the high cost is required to perform ongoing operations such as power consumption, maintenance, security, cooling system, etc. Also, the continuous advancement in technology has made it essential for the existing data center to adapt to the changing technologies, thereby increasing the cost structure of the data center, which majorly includes investing in costs related to advanced hardware and software solutions, leading to keeping incapacity with the changing demands of the industries. These costs can be significant and impact the overall long-term financial structure of the data center.

Component Insights

The hardware segment held the highest revenue share of around 65% for the market 2022. The exponential growth of social media, digital transactions, and the Internet of Things (IoT) needs data storage to expand its storage and processing capabilities. The upgradation of hardware technologies such as CPU, servers, storage devices, GPU, and memory drives the need for data centers to update their hardware installations, thereby driving the hardware segment of the market. Further optimized hardware solutions are required to accelerate complex tasks and model training.

The software segment is expected to grow fastest at a CAGR of over 12% over the forecast period. The growing demand for virtualization and cloud computing is expected to propel the growth of the software segment. The advanced software solutions can help data centers enhance security through robust encryption, intrusion detection, access controls, and monitoring. Moreover, the growing need for energy-efficient green data centers relies on enhanced software solutions to monitor cooling systems, power consumption, and other operations.

Hardware Insights

The enterprise network equipment segment held the highest revenue share of more than 48% for the market in 2022. The exponential growth of social media, digital transactions, and the Internet of Things (IoT) needs data storage to expand its storage and processing capabilities. The upgradation of hardware technologies such as CPU, servers, storage devices, GPU, and memory drives the need for data centers to update their hardware installations, thereby driving the enterprise network equipment segment of the market. Further optimized hardware solutions are required to accelerate complex tasks and model training.

The UPS (Uninterruptible Power Supply) segment is expected to grow fastest at a CAGR of over 14% over the forecast period. To manage the growing amount of data processing and storage, data centers and cloud computing capabilities are growing. The demand for sustainable power protection to enable continuous operations and avoid data loss expands owing to the nation's increasing reliance on digital technology, data centers, and cloud services. In these instances, UPS systems have become essential to prevent downtime and data corruption, thereby increasing the demand for the market.

Software Insights

The virtualization segment held a revenue share of around 17% for the market in 2022. The growing demand for virtualization and cloud computing is expected to propel the growth of the software segment. The advanced software solutions can help data centers enhance security through robust encryption, intrusion detection, access controls, and monitoring. Moreover, the growing need for energy-efficient green data centers relies on enhanced software solutions to monitor cooling systems, power consumption, and other operations.

The virtualization segment is expected to register the fastest growth at a CAGR of around 15% over the forecast period. Virtualization enables data centers to enhance the utilization of physical hardware resources by operating multiple virtual machines on a single physical server. The consolidation leads to minimized hardware maintenance and procurement costs. Also, effective resource management can be made feasible by virtualization, which enables IT administrators to dynamically assign CPU, memory, and storage to VMs in response to demand. This results in enhanced performance and improved resource management.

Services Insights

The professional services segment held the highest revenue share of more than 50% for the market in 2022. Traditional data centers are unable to meet the growing demands of modern workloads. Professional services are required to execute, design, and implement upgrades for enhanced performance, capacity, and efficiency of data centers. The growing usage of digital operations and infrastructure across organizations for construction, design, and commissioning of new data centers is propelling the demand for professional services.

The support services segment is expected to register the fastest growth at a CAGR of more than 11% over the forecast period. Support services enable organizations to implement, design, and maintain data centers for handling the demands of modern operations. Data center are becoming complex with the integration of advanced hardware, networking, software, and storage components. The support services assist in optimizing and managing these complex tasks effectively, which is driving the demand for the market.

Type Insights

The on-premise segment held the highest revenue share of around 40% for the market in 2022. On-premise data centers provide enterprises with complete control over the security and data stored, following the stringent compliance requirements based on industry standards or sensitive data handling necessities. Also, managing and building on-premise data centers enables for customization of infrastructure to fulfill the required needs of the business, performance demands, and application needs. On-premise data centers further form an ideal type for applications requiring high performance and low latency, as they help in faster data transmission and optimized user experience. These factors are collectively supporting the growth of on-premise.

The hyperscale segment is expected to register the fastest growth at a CAGR of over 13% over the forecast period. The growing demand for cloud computing services is fueling the need for hyperscale data centers to offer enhanced storage, computing power, and network resources needed to aid a huge range of cloud-based applications. Further, the growing need for delivering media content, such as online gaming, videos, and digital media, requires high-performance data centers with extensive bandwidth to ensure error-free content distribution. This is expected to boost the demand for the hyperscale segment over the forecast period, thereby driving the growth of the market.

Server Rack Density Insights

The 10-19kW segment held the highest revenue share of around 40% for the market 2022. The 10-19kW server rack density is known for its medium to high power consumption. Data centers with 10-19kW power densities mainly apply across industries, effectively supporting high-performance computing tasks. Engineering simulations, scientific research, and financial modeling need substantial computing power. This growing demand is expected to boost segmental growth, thereby fueling the growth of the market across regions.

The 20-29kW segment is expected to register the fastest growth at a CAGR of over 13.0% over the forecast period. The growing demand for data storage and processing owing to the dependence of businesses on digital operations is expected to fuel the growth of the segment over the forecast period. Innovation in technology and high-performance requirements boost the demand for the facilities to fulfill the organization's and business demands. The growing need for energy-efficient cooling systems and power consumption is anticipated to fuel the demand for the 30-39kW segment, thereby driving the market growth.

Redundancy Insights

The N+1 segment held the highest revenue share of over 60% for the market in 2022. N+1 redundancy offers high processing and minimized downtime to data centers. Downtime in business processes leads to significant financial losses and damage to an enterprise’s position. N+1 redundancy offers a backup system allowing operations to continue even after any failure in the component. Many businesses are adopting cloud-based services and online transactions, where uninterrupted availability is important. The N+1 redundancy segment offers this service, thereby propelling the market growth.

The N+2 segment is expected to register the fastest growth at a CAGR of more than 12% over the forecast period. N+2 redundancy includes two additional backup systems, providing higher availability and reliability beyond the primary infrastructure, thereby anticipating segment growth over the forecast period. Industries such as healthcare, finance, and emergency services requiring mission-critical tasks require uninterrupted services. Also, multinational corporations require data centers that help offer consistent services throughout different time zones across regions. The N+2 redundancy helps in offering an additional layer of protection, thereby securing the data against disruptions. This is expected to propel the demand for the market in the coming years.

PUE Insights

The 1.2-1.5 segment held the highest revenue share of over 45% for the market in 2022. Data centers with 1.2 to 1.5 power usage efficiency (PUE) are considered highly efficient in terms of energy consumption. The growing demand for environmentally friendly and sustainable operations is accelerating the adoption of advanced technology solutions such as 1.2-1.5 PUE, thereby propelling the demand for the market. Further, the need for long-term financial savings through lower operational costs and reduced energy consumption is anticipated to generate huge demand for the market segment.

The less than 1.2 segment is expected to register the fastest growth at a CAGR of more than 13% over the forecast period. Data centers with 1.2 PUE depict highly efficient data centers with minimized energy wastage. Lower PUE values allow lower energy bills and operational costs. The minimized energy and optimized power & cooling distribution systems allow the data centers to achieve sustainable cost savings in future years. Henceforth, there is a growing demand for the segment, further supporting the growth of the market.

Design Insights

The traditional segment held the highest revenue share of around 75% for the market in 2022. The traditional market is expected to develop due to the rising need for data storage and processing, safety issues, regulatory limitations, specific hardware specifications, and enhanced connectivity. To accommodate the growing data requirements, these data centers could be developed by adding more servers, networking equipment, and storage. The increasing demand for greater security is projected to drive the market forward.

The modular segment is expected to register the fastest growth at a CAGR of more than 13.0% over the forecast period. Modular data centers can be easily deployed and operational, enabling enterprises to meet recent data processing requirements without additional timelines. The growing need for customization specific to computing requirements is expected to boost the demand for modular-type data centers in future years. Such customization allows the data centers to be adaptable across various industries and applications.

Tier Level Insights

The tier 3 segment held the highest revenue share of more than 55% for the market in 2022. The demand for efficient and reliable data processing and storage solutions is expected to grow for the segment. The continuous digital transformation across sectors needs more processing power, connectivity, and data storage, which tier 3 level data centers mainly provide. Further, the government has been adopting stringent data protection and security regulations, where tier 3 level data centers are highly adopted by organizations to meet the standards.

The tier 4 segment is expected to register the fastest growth at a CAGR of more than 12% over the forecast period. These data centers are built to be fully fault tolerant and have redundancy for every data center component. Tier 4 level data centers offer a high standard of security and are usually used by government organizations, large businesses, and enterprises requiring constant availability. This type of data center has very little annual downtime, which is at most 26.3 minutes per year. These data center attributes 2N and 2N+1, fully redundant infrastructure, which is a huge difference in tier 4 and other types of data centers. These characteristics of tier 4 data centers make them grow at the fastest rate.

Enterprise Size Insights

The large enterprise segment held the highest revenue share of over 80% for the market in 2022. Large enterprises create and handle huge data from multiple sources, such as customer transactions, interactions, and operations. Further, there has been a rise in the adoption of cloud computing to boost operations, enhance scalability, and minimize costs. The data center offers capabilities to support advanced technologies and applications. It is vital in housing cloud infrastructure, promising reliable access to cloud services. The growing global operations and advanced technologies are driving the growth of the market across large enterprises.

The small enterprises segment is expected to register the fastest growth at a CAGR of over 12% over the forecast period. Small enterprises are focused on investing more in online technologies to attract customers and stay competitive worldwide. Most small enterprises depend on data centers to manage inventory, transaction, and customer information efficiently and securely. Small businesses also adopt cloud services for cost-effective software, infrastructure, and storage solutions. This growing demand across small enterprises is anticipated to boost the growth of the market in future years.

End-use Insights

The cloud service provider segment accounted for the largest revenue share in 2022, contributing more than 60% of the overall revenue in the data center market. The adoption of cloud computing services by organizations, businesses, and people is likely to increase demand for data centers, which will fuel market expansion. Data accessibility and company continuity are ensured by the disaster recovery and backup capabilities offered by cloud services. Additionally, edge computing services that permit data closer to its sources and hence reduce latency are advantageous to cloud service provider end users. These elements are promoting the expansion of the data center industry.

The technology provider segment is anticipated to grow at a CAGR of over 11% during the forecast period. The growing demand for data centers is propelled by technology end users, which includes a huge range of industries and sectors. Digital transformation is being implemented by technology provider end users to modernize their businesses, improve customer experiences, and increase productivity. The infrastructure needed to support these disruptive projects is provided by data centers. To manage electronic health records, medical imaging data, and telemedicine services, healthcare institutions rely on data centers, which guarantee efficient and secure data access and storage.

Regional Insights

North America held the largest market share of around 40% in 2022. North America is a technological innovation and digital transformation hotspot. The burgeoning digital economy in the region drives the need for data centers to serve cloud computing, e-commerce, online services, and other digital projects. Cloud services are widely used in North America due to their scalability, flexibility, and low cost. More data centers are needed to expand cloud providers' infrastructure. Finance, healthcare, entertainment, and e-commerce all create and require massive volumes of data. Data centers are required to store, process, and analyze this data.

Asia Pacific is expected to register the fastest growth, at a CAGR of around 13%, over the forecast period. Finance, healthcare, manufacturing, and retail are among the areas undergoing fast digitization in Asia Pacific. This digital transition necessitates the development of data centers to support cloud computing, IoT, AI, and other technological endeavors. Asia Pacific's thriving e-commerce business requires data centers to manage online transactions, inventories, and customer data to provide seamless and efficient shopping experiences. Because of the extensive use of mobile devices and smartphones in Asia Pacific, there is an increased demand for data centers to manage mobile app usage, mobile payments, and mobile-based services.

Key Companies & Market Share Insights

The key market players in the global market in 2022 include Equinix, Amazon Web Services, Inc., Google Cloud, Oracle, IBM, CyrusOne, Alibaba Cloud and Microsoft. Intense competition among leading players for introducing advanced and innovative products is encouraging companies to invest in research and development of energy-efficient data centers. Furthermore, several end users are adopting data center solutions, making it easier for data centers to adopt green practices without compromising performance.

Companies are adopting strategies to leverage new opportunities in the market and target new customers by developing sustainable products. For instance, in April 2023, Microsoft has launched its newest trusted cloud space in Poland, the first in Central and Eastern Europe.  Microsoft's Polish cloud area comprises three physical locations in and around Warsaw, each with one or more data centers. It ensures the greatest levels of data security, privacy, and regulatory compliance in the country. Some prominent players in the global data center market include:

• Alibaba Cloud

• Amazon Web Services, Inc.

• AT&T Intellectual Property

• Lumen Technologies (CenturyLink)

• China Telecom Americas, Inc.

• CoreSite

• CyrusOne

• Digital Realty

• Equinix, Inc.

• Google Cloud

• IBM

• Microsoft

• NTT Communications Corporation

• Oracle

• Tencent Cloud

Data Center Market Report Scope

Global Data Center Market Report Segmentation

The report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest trends in each of the sub-segments from 2018 - 2030. For the purpose of this study, Grand View Research has segmented the global data center market report on the basis of component, type, server rack density, redundancy, PUE, design, enterprise size, tier level, end-use, and region.

• Component Outlook (Revenue; USD Billion; 2018 - 2030)

  • Hardware

    • Servers

    • Enterprise network equipment

    • PDU

    • UPS

  • Software

    • DCIM

    • Virtualization

    • Others

  • Services

    • Managed Infrastructure Services

    • Hosting Services

    • Support Services

    • Professional services

• Type Outlook (Revenue; USD Billion; 2018 - 2030)

  • On-premise

  • hyperscale

  • HPC

  • Colocation

  • Edge

• Server Rack Density Outlook (Revenue; USD Billion; 2018 - 2030)

  • <10kW

  • 10-19kW

  • 20-29kW

  • 30-39kW

  • 40-49kW

  • >50kW

• Data Center Redundancy Outlook (Revenue; USD Billion; 2018 - 2030)

  • N+1

  • 2N

  • N+2

  • N

• PUE Outlook (Revenue; USD Billion; 2018 - 2030)

  • Less than 1.2

  • 1.2 - 1.5

  • 1.5 - 2.0

  • Greater than 2.0

• Design Outlook (Revenue; USD Billion; 2018 - 2030)

  • Traditional

  • Containerized

  • Modular

• Tier Level Outlook (Revenue; USD Billion; 2018 - 2030)

  • Tier 1

  • Tier 2

  • Tier 3

  • Tier 4

• Enterprise Size Outlook (Revenue; USD Billion; 2018 - 2030)

  • Large Enterprise

  • Small & Medium enterprises

• End-use Outlook (Revenue; USD Billion; 2018 - 2030)

  • Cloud Service Provider

  • Technology Provider

  • Telecom

  • Healthcare

  • BFSI

  • Retail & E-commerce

  • Entertainment & Media

  • Energy

  • Others

• Region Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

    • Netherlands

    • Poland

  • Asia Pacific

    • India

    • China

    • Japan

    • Australia

    • South Korea

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa (MEA)

    • UAE

    • Saudi Arabia

    • South Africa