Gartner Research

Four Dramatic Shifts in Colocation Offerings and Contracts

Published: 11 November 2013

ID: G00258580

Analyst(s): Bob Gill


Fundamental shifts in the nature of colocation offerings, as well as how these offerings are being valued, will affect every enterprise using or planning to use colocation. Data center managers must understand and embrace these four trends.

Table Of Contents
  • Impacts


Impacts and Recommendations

  • The increasing power density of IT equipment is forcing colocation providers to shift from contracts based on real estate (cost per square foot) to those based on utility brokerage (cost per kW)
  • Regional overbuilding and market shifts by colocation providers have led to abundant capacity, continued consolidation of players and downward pricing pressure in some segments and geographies
  • Product portfolio expansion, particularly by wholesale colocation providers, is forcing data center managers to deal with the blurring of wholesale/retail boundaries
  • Commoditization of space/power is driving colocation providers to differentiate through value-added services, such as network topology options and hosting/cloud migration, and deployment of advanced technologies, such as modular units and user-accessible DCIM systems

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