The hyperscale data center market consists of large-scale data centers owned and operated by hyper giants such as Microsoft, Amazon Web Services, Google, Apple, Facebook and Alibaba. Hyperscale data centers provide efficient and cost-effective data storage and processing solutions to support the continuously growing data traffic and usage of Internet of Things (IoT), artificial intelligence (AI) and edge computing applications. These data centers have gigantic capacities ranging from 50 MW to multiple 100 MW power requirements and space requirements of over 200,000 square feet. Hyperscale data centers offer several advantages such as economies of scale in purchasing and operating IT infrastructure, centralized management and control, scalable design and low latency access to data worldwide.
The increasing demand for cloud storage, big data analytics and shift towards digitalization across industries has significantly propelled the need for data centers with massive storage capacities and processing power.
The Global hyperscale data center market is estimated to be valued at US$ 197.08 Bn in 2024 and is expected to exhibit a CAGR of 30% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the hyperscale data center market are Aecom, DPR Construction, Holder Construction, Jacobs, M+W Group (Exyte), Bouygues Construction, Mercury, Arup, and Benthem Crouwel Architects. These players are focusing on expanding their data center footprints and capabilities to tap the rising opportunities in colocation and cloud services globally.
The key opportunities in the hyperscale data center market include the increasing demand for colocation solutions from hyperscalers and enterprises, investment in renewable power sources by data center operators and the rising deployment of edge data centers. Several international hyperscalers are also expanding their presence across APAC, MEA and Latin American regions to address the digital infrastructure needs of these emerging markets.
The global expansion of hyperscale cloud platforms and increasing data localization regulations worldwide have prompted major investments by hyperscale data center operators such as AWS, Microsoft, Google and Alibaba in developing cloud regions and data centers across international markets. For instance, Google announced plans to invest over $9 billion in offices and data centers across the United States in 2021.
Market drivers
Growing reliance on digital connectivity: The COVID-19 pandemic has accelerated digital transformation across industries and fueled higher reliance on cloud computing and data storage resources. This is driving robust growth in the demand for hyperscale data center infrastructure globally.
Surging data traffic: The proliferation of social media, video streaming, IoT, big data analytics and emerging technologies such as AR/VR have massively scaled up global data traffic volumes. For instance, global IP traffic is projected to grow at a CAGR of 22% from 2021 to 2026. This rising data consumption calls for rapid expansion of hyperscale data centers.
Market restrain
High capital investments: Setting up and operating hyperscale data centers requires multi-billion dollar capital investments on buildings, power, storage, networking and IT infrastructure. This massive funding requirement restrains capacity expansion plans of small and medium players in the market.
Complex connectivity requirements: Hyperscale data centers need to efficiently route and process large data traffic volumes worldwide. Meeting the stringent connectivity and latency needs of cloud platforms poses technological challenges for providers and increases project lead times.
Segment Analysis
The hyperscale data center market can be segmented by use – cloud providers, colocation providers, and enterprises. The cloud provider segment dominates the market currently as major cloud players like AWS, Microsoft, Google, Facebook, and IBM have built multiple state-of-the-art hyperscale data center facilities globally to cater the high and rising demand for cloud-based services. These cloud providers have data centers located close to various population zones and have highly reliable infrastructure to provide fastest data processing and storage.
The colocation providers segment is also growing at a notable pace as number of companies are opting for colocation facilities for renting data center space, bandwidth, and related support services. Enterprises also develop hyperscale facilities to fulfill their proprietary digitalization and data analytical needs but the demand is relatively lower than cloud and colocation segments.
Global Analysis
North America region currently has the largest share in the hyperscale data center market due to presence of majority global cloud players. The US dominates due to ideal conditions like tax incentives for data center development, cheap electricity costs, and strong network connectivity. The Asia Pacific region is fastest growing due to surge in digitalization, rapid industrialization and rising internet usage in countries like China and India. China and India are emerging as major data center hubs. Europe and Middle East & Africa regions are also extending investments to develop digital infrastructure and localized cloud facilities.