Because there is no local report on how the data center services market will evolve in 2024, we looked for the main predictions for Europe, so that we can make an indicative analysis. Throughout the continent, there are more than 1,200 data centers that offer specific services, cloud and colocation, and even if most of them are in the west of the continent, Romania is well connected to this market so that the trends are similar.
More cloud, more Data Centers
In Europe, ResearchAndMarkets.com data indicates a total value of more than USD 17.5 billion in 2023 and a forecasted growth of 13.1% for the data center services market in 2024 and the following years. As a general opinion, the European market for data center and colocation services is currently undergoing consistent growth, mainly driven by the expansion of the digital economy, the use of IoT, cloud computing and Machine Learning and Artificial Intelligence (ML/AI) technologies. The trend is captured by Gartner’s forecasts that global spending on public cloud services will grow by 20.4% in 2024, with the source of growth being a combination of rising cloud provider prices and increased usage. Romania follows the same trends in the area of cloud and digitization, and according to the local report “Cloud Business Survey” carried out by PwC in 2023, 38% of Romanian respondents propose to move all operations to the cloud in the next two years, and 43% want to move half or more of operations.
Intensive digitization and widespread cloud migration directly contribute to the need for more bandwidth for smooth data transfer, but above all for more processing power and storage space.
Trends in the data center services market
We put together the opinions of several specialists in the field and outlined some relevant aspects for the data center services market in 2024. The list includes:
Demand for capacity/service is increasing. Europe is experiencing a digitization boom, with companies wanting to innovate on all fronts. Cloud, AI, IoT, fintech, all these technologies need performance and processing power, which can only come from Data Center operators. Gone are the days when Data Centers had vacant spaces. JLL, probably one of the few “real estate” companies specialized in the sale of premises in Data Centers, believes that most of the facilities that will be inaugurated in 2024 will be pre-contracted by the beneficiaries, which significantly reduces the offer on the market.
The installed base remains small. Even if in Europe the pace of launching new data centers or expanding existing ones seems intense, not as many facilities are inaugurated as needed. The phenomenon is felt more acutely in Romania, where in 2023, for example, no Data Center with the relevant infrastructure was opened. The only newly launched facilities belonged to public authorities. Therefore, private entities that cannot economically afford to invest in their own data room/server room have few options available to them.
The employment rate is increasing. The two directions mentioned above contribute to increasing the degree of employment in Data Centers in most European countries. Companies that need significant resources will find it harder and harder to find them. According to CRBE, the space available in European Data Centers will reach 10.7% in 2024, the lowest rate in history. In certain areas, such as Frankfurt, this rate could even reach 4.8%.
Services are diversifying and refining. Increasing digitization in all industries and the increased importance of advanced IT infrastructure are expected to lead to a diversification of data center services. Operators’ attention is shifting from colocation and IaaS to more value-added SaaS services, including Ai as a Service, Backup as a Service or Disaster Recovery As a Service (DRaaS).
The adoption of new technologies such as SD-WAN and 800G optical transceivers. Processing power and data traffic have grown rapidly in recent years. Moreover, customers are demanding an increasing degree of flexibility in configuring services and associated infrastructure. To meet the demand, Data Centers are increasingly integrating new technologies into infrastructure management and service delivery. SD-WAN is a network architecture that provides an unprecedented level of flexibility and control by limiting hardware dependency. At the level of connections and data transfer, 2024 brings a growing interest in the implementation of 800G optical transceivers technology, capable of supporting the traffic generated by the new generation of applications in the HPC, AI and ML series.
Interest in sustainability is growing. Driven by beneficiaries and general market trends, data centers are focusing on their energy and water consumption and recycling of equipment and materials. We will see more and more measures to reduce their ecological footprint and to contract more renewable energy. Expect to see more such efforts in 2024 as pressure from customers, investors and regulators turn sustainability into a competitive advantage.
We will most likely witness an accentuated dynamic on the data center services market in 2024. On the one hand, operators will invest in offering the best conditions (availability, flexibility) and increasingly diversified services. For example, the M247 Data center in Bucharest has been operating with a 100% availability rate since opening. We have experienced practically no service interruptions in all these years, offering conditions above those assumed by the SLA (minimum of 99,98%).
On the other hand, demand will increase (space, infrastructure, services), which puts pressure on available resources, given that there are no major projects announced for completion in 2024. Therefore, we recommend that clients plan their projects in advance and -evaluate as correctly as possible the needs of Data Center infrastructure and services.
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