Colos and MSPs cash in on cloud -- while they can

The growth in cloud usage should mean fewer data centers, yet more are being built, albeit not by the usual suspects

Colos and MSPs cash in on cloud -- while they can

According to professional services firm Jones Lang LaSalle, "More business than ever is happening online, and data centers are feeling the effects. The data center market saw tremendous growth in 2015, with independent providers in the United States alone earning revenues of $115.3 billion and experiencing 6.1 percent growth."

How can the data center market be growing when enterprises are moving to the cloud? Some people say the surge in data centers is concentrated at the cloud computing providers, such as Amazon Web Services, Google, Microsoft, IBM, and Apple, who are all building out more data center space to handle their expansion in services.

But from what I see, most data center growth is occurring at independent providers -- that is, colocation providers and managed service providers (MSPs).

What's driving that growth: Because the public cloud isn't the right option for many enterprise workloads, enterprises are seeking alternative locations to host them. IT is increasingly looking to replace its own private data centers using a mix of public clouds and outside hosts, which means the hosting companies are busily expanding their own data centers.

Ultimately, the net effect will be fewer data centers or at least a slower growth rate. But we won't see it for a while because during this transition period, hosting companies have to ramp up the infrastructure that will ultimately replace the private data centers already built.

As the public cloud providers have already shown us -- they do in 100 square feet of what a typical private data center does in 1,000 square feet -- the data center trend is to do much more with much less. That's the promise of the cloud, but it applies to hosted environments as well.

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