Colocation and Managed Hosting (CMH) Market

Date: 2016-05

Colocation centers can be considered as data center which is a mixture of cloud or hybrid cloud services and hosting servers on their own by customers. In this concept, the colocation service provider offers physical space, power, cooling, connectivity etc and the customer uses them to host their own servers, software. This kind of model offers security, lower operating costs and zero infrastructure costs. Colocation centers are generally divided into retail colocation and wholesale colocation, the major difference between the two being the size of space offered for rental purposes. Wholesale colocation gives an entire floor (more than 10,000 Sq.ft) compared to retail colocation which has rental plans like unit-wise colocation, quarter rack, half rack and full rack colocation etc.

Colocation is a very cost effective plan for small and medium businesses because of the following advantages:
Zero infrastructure building costs and minimal operating costs.
Servers and IT infrastructure is owned by the customer and hence data security, software for operation purposes are easy to control, maintain and monitor.
It helps companies to expand to multiple locations and lease space rather than build new data centers. This is especially significant for e-commerce companies and other online service providers for which proximity to customer ensures speed and better service.
Costs of hiring IT personnel are removed.
Historically, speaking power wise, retail colocation customer needs are catered to under the 500kW capacity range whereas wholesale colocation customers typically need more than 1 megawatt of power capacity.

The colocation market is growing at a CAGR of around 16% during 2013 – 2018 and is expected to increase from around $22.5bn in 2013 to reach $47.2bn in 2018.The colocation cloud services market is around $4bn currently and is growing at around 60% YoY, the fastest of the 4 different segments in the global CMH market.


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