Why the hyperscale data center market is set to soar

The increasing demand for cloud-based services paired with the rising number of smartphone and internet users will continue to boost hyperscale data center market growth over 2019–25

9May

The increasing demand for cloud computing and big data across multiple industries is proliferating the hyperscale data center market demand. The product adoption has been fueled mainly by the ever-increasing number of mobile devices with internet access. Big data analytics studies huge amounts of data to help enterprises make smarter business moves, enhance operations and garner higher profits. However, use of these technologies also results in heavy data traffic, which is what drives businesses to invest in data center expansions.

A report by Cisco projects global cloud data center traffic to reach 19.5 zettabytes per year by 2021, while traffic from the cloud will account for 95% of all data center traffic by 2021. Hence, increasing data traffic from the growing adoption of cloud computing and big data will primarily drive the hyperscale data center market growth.

This trend is further supported by the rising number of cloud-based services triggered by the increasing number of smartphone users with access to the internet. Globally, the percent of the population that uses a smartphone is estimated to grow to 48% by the end of 2021, according to NewZoo. Meanwhile, internet users now comprise 57% of the global population, according to Internetworldstats.com, with people spending over six hours online each day on an average. This massive increase in mobile users has encouraged organizations to shift their businesses online, generating massive demand for cloud-based services.

Organizations are increasingly preferring cloud-based services such as Platform as a Service (PaaS), Infrastructure as a Service (IaaS) and Software as a Service (SaaS) to support their business operations. It is the ease and flexibility of such service that led to their fast adoption in the mainstream, which is estimated to keep growing in the coming years. Recently, Melius Group inked a cloud service provider agreement with Cobalt Iron to offer its Adaptive Data Protection SaaS enterprise solution to customers in the UK and Ireland. The increasing demand for cloud-based services paired with the rising number of smartphone and internet users will continue to boost hyperscale data center market growth over 2019–25.

In addition to IT, the telecom industry is also one of the major industries driving the data center boom, thereby fueling the hyperscale data center industry share. Major telecom firms are forced to adapt to the changing technology landscape in order to keep up with the ever-increasing demand, as the growing number of smartphone users are necessitating the requirement of better and more flexible data plans.

For example, Virgin Mobile is letting its yearly plans subscribers cut their mobile bill in half along with three-months complimentary access to the world's leading streaming service Netflix. Owing to the rapid increase in data generation and storage requirement from such plans, businesses have been working to lay the groundwork for enough infrastructure. According to a report by Global Market Insights, Inc., the telecom and IT sector contributed to 45% of the hyperscale data center industry share in 2018.

The demand for large-scale infrastructure facilities will continue to grow in the years ahead due to increase in data generation and storage requirement. The aging 3G carrier infrastructure is slowly being phased out by the 4G LTE networks and with the emergence of 5G networks companies would require more scalable and efficient IT environment. Therefore, the spate of telecommunications companies enhancing their IT infrastructure in order to serve a wider customer base will boost the hyperscale data center market growth in the future.

Additional factors contributing to the growing data traffic includes the adoption of IoT technology, increasing deployment trends from the BFSI industry and rising use of internet-based services, which will further accelerate the expansion of hyperscale data center industry. Although security concerns had hindered the adoption of cloud technologies, which are one of the major market drivers, changes in data center governance and data control has helped in better protecting customer information, thereby boosting the market growth. A report by Global Market Insights, Inc., forecasts the hyperscale data center market to exceed a valuation of $65bn by the end of 2025.

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