Colocation Edge Data Center Market size was over USD 8.29 billion in 2024 and is projected to reach USD 84.01 billion by 2037, growing at around 19.5% CAGR during the forecast period i.e., between 2025-2037. In the year 2025, the industry size of colocation edge data center is assessed at USD 9.58 billion. The market growth is due to the increasing investments in consideration of edge data center consolidation initiatives mainly for cost savings. According to a report, there are about 11,000 data centers worldwide as of Decemeber 2023. Furthermore, the increasing utilization of novel approaches such as server and storage virtualization and high-density storage solutions contributes to the expansion of market.
In addition, the spread of the healthcare sector is also propelling the growth of the colocation edge data center market. High investments in infrastructural expansion are catering to the changes in the pharmaceutical sector, as the healthcare sector generates about 30% of the world's data volume, and by 2025 it is expected that the compound annual growth rate of healthcare data will cross 36%. This is 11% faster than media & entertainment, 10% more than financial services, and 6% higher than manufacturing industries.
Growth Drivers
In addition, 5G technology’s ultra-wideband perfectly matches edge data centers; this combination allows quick data transfer from connected devices to nearby edge data centers, enabling real-time processing and responses.
The annual revenue from cloud infrastructure services is USD 178 Billion. 90% of major businesses have implemented a multi-cloud infrastructure. Therefore, the BFSI industry's growing integration of cloud-based solutions will increase demand for colocation edge data centers that guarantee quick and instantaneous data transfers.
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
19.5% |
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Base Year Market Size (2024) |
USD 8.29 billion |
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Forecast Year Market Size (2036) |
USD 84.01 billion |
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Regional Scope |
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Type (Retail, Wholesale)
The retail segment in the colocation edge data center market is estimated to gain the a share of about 54% in 2037. The segment growth can be attributed to its growing usage as it allows businesses to scale their infrastructure as needed, without having to invest in and manage their data centers. According to a report, the spending on retail cloud infrastructure increased by 23% in 2023.
Moreover, retail colocation facilities are well-connected to various network providers, enabling businesses to access high-speed internet connectivity and interconnect with other organizations, increasing demand for scalable and flexible IT infrastructure solutions. For instance, with a 41% market share in 2022, Cisco maintained its position as one of the top manufacturers of enterprise network infrastructure.
Retail colocation allows businesses to rent space in a shared data center, allowing them to easily scale up or down as their needs change. Furthermore, the growth of retail colocation is highly cost-efficient, and by opting for retail colocation, businesses can also avoid such expenses and can instead pay for the space and services they need. Therefore, altogether these factors are propelling the growth of the segment.
End-user (SMEs, Large Enterprises)
The SME segment in the colocation edge data center market is set to garner a notable share during the forecast period due to the availability of several affordable ways for outsourcing IT infrastructure, which lowers operating costs and also improves scalability. Additionally, the advancements in technology have also leveled the playing field for SMEs, which allows them to compete with larger companies. Digital tools, online platforms, and e-commerce have made it easier for SMEs to reach customers globally for marketing their products or services, and streamline their operations.
Moreover, the changing consumer preferences and demands have created opportunities for SMEs. Consumers are increasingly seeking personalized and niche products or services; which SMEs are often well-positioned to provide. Therefore, these factors are accelerating the growth of the segment.
Our in-depth analysis of the colocation edge data center market includes the following segments:
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Type |
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End-user |
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Application |
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North American Market Forecast
The colocation edge data center market in the North America is anticipated to gain a share of about 46% by the end of 2037. The market growth in the region is expected on account of the growing use of cloud services by US and Canadian businesses in a variety of industries. According to a report, about 70% of businesses use cloud services in the U.S. which has increased the total spending on cloud services by 25%.
Cloud solutions from hyper-scale providers like AWS, Microsoft, and Oracle are being used by enterprises more frequently to meet their computing capacity requirements with the least amount of money. In addition to this, several data centers have already been developed by businesses in the region. Therefore, these factors are accelerating the growth of the colocation edge data center market in the region.
APAC Market Statistics
The APAC region will also encounter huge growth for the colocation edge data center market during the forecast period and will hold the second position owing to a significant increase in the data centers and edge computing solutions in countries like China, India, and Singapore, which is escalating the growth of the market in the region. According to a report, there has been an increase of about 12% in Asia’s data center landscape.
Additionally, the influence of 5G networks in the region is expected to further drive the growth of colocation edge data centers, as they can support the low-latency requirements of emerging technologies like autonomous vehicles and smart cities.
Author Credits: Abhishek Verma
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