For the last five years, industry analysts have predicted that cloud will kill the datacenter. So why are colocation revenues continuing to climb at about 10% a year? Why did Equinix, the largest datacenter provider in the world, see revenues climb 13% YOY in the fourth quarter of 2015?
The Unexpected Rise of the (Managed) Datacenter
For the last five years, industry analysts have predicted that cloud will kill the datacenter. So why are colocation revenues continuing to climb at about 10% a year? Why did Equinix, the largest datacenter provider in the world, see revenues climb 13% YOY in the fourth quarter of 2015?
The answer is that as enterprises begin to move “easy” workloads to AWS, they want to move not-ready workloads to a managed environment outside their internal data centers. Somewhat paradoxically, colocation is rising in popularity precisely because enterprises want cloud; it fits well into a hybrid cloud plan, helps enterprises consolidate datacenters, and helps transition people and processes to a shared responsibility model.
The Decline of the Corporate Datacenter
Enterprises want out of the datacenter business…eventually. Just 25% of enterprises in North America will build a new datacenter when they run out of space in existing properties, according to a report by 451 Research. A whopping 76% will choose colocation or cloud, followed by 62% who will consolidate existing datacenters. By 2018, 50% of all server racks in North America will be located at cloud and colocation data centers, up from 40% today.
They will continue to invest in improving existing datacenters, but seem unwilling to guesstimate their computing needs twenty years into the future or spend hundreds of millions of dollars on non-differentiating technology.
From our founding in 1993, Logicworks was built to solve complex IT problems. We attract world-class talent to work at our NYC headquarters, and we deliver private and managed public clouds for the largest Healthcare, Legal and Public Sector clients in the United States.