Colocation: Strengths, structure and challenges

Alongside telecommunications networks, data centers (DC) represent the basic infrastructure for digitalization. Their importance and the performance they offer have continuously increased in recent years. In particular, the market for colocation data centers has been growing at a dizzying pace: Arizton Advisory and Intelligence forecasts a global CAGR growth rate of approximately 6.5 percent for the colocation market by 2027 (compared to 2021) . Demand is also growing in Germany. According to the industry association Bitkom, more than 10,000 businesses in the country are already using colocation services . By 2025, colocation facilities will account for an impressive 50 percent of data center capacities – up from approximately 40 percent in 2020.

Table of contents:

• The principle of colocation
• Advantages of colocation data centers
• Colocation: Typical structure and challenges
• Solutions for colocation providers

The principle of colocation

Colocation in the end customer segment offers businesses dedicated IT infrastructure space in a shared data center. That is to say that instead of installing their IT infrastructures in their own premises, companies rent space in a colocation center. When they do this, they generally purchase their own cabling, including servers, storage and firewalls, and pay the colocation provider for the space, cooling, power supply, bandwidth and physical security. The operating risks associated with the DC facility as well as the capital investments for the construction, conversion and provision of the “building” infrastructure are the responsibility of the colocation provider. In a colocation solution, the customer is responsible for installing and configuring their own servers and owns the cabling, hardware and software...

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