The "Europe Data Center Interconnect Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" report has been added to ResearchAndMarkets.com's offering.
The European data center interconnect (DCT) Market is expected to reach a CAGR of 9.2%
Lately, Switzerland has been gaining a strong foothold in data centers from providers, such as Equinix, Swisscom, Orange Business Services, Green Datacenter, Interxion, and Colt Technology Services, due to the presence of the world's largest banks and financial institutions.
Government agencies are offering tax breaks and other benefits to attract the maximum number of investors to construct a hyperscale data center market in Western Europe & Nordic. Nordic countries, due to vast resources of renewable energy low power prices, favorable climate conditions, good infrastructure as well as a skilled workforce, are well suited for data centers and, therefore, for DCT and have resulted in a surge of foreign investments over the years.
In the last few years, power consumption in the data center sector worldwide has increased rapidly. According to the European Commission, by 2020, data centers in Europe will utilize 259 TWh of electricity, which represents 1.7% of the world's total energy consumption. And in the next ten years, the market will be generating 30 times more data with an increased number of servers leading to a higher amount of energy consumption. Therefore, data centers in the region are concentrating on the reduction of high power consumption, WAN consolidation, and bandwidth requirements creating growth opportunities for data center interconnect market.
The COVID-19 pandemic has resulted in a subsequent need to enforce social distancing in response to the lock-down. Due to this, there is a real drive across the public sector in Germany and other parts of Europe to shift from traditional channels to digital channels to enable citizens, businesses, and public sector staff to access public services and securely share data from remote locations.
This has led to a spike in online traffic and has reinforced the importance of data centers and what they do. Also, demand for cloud services is soar in some sectors but wither in other verticals as they shift into survival mode. All the above factors are enablers for the steady growth of the market in the short term as well as long time.
Key Market Trends
Cloud Migration to drive the Growth of the Market
The increasing demand from domestic and international enterprise and cloud computing customers has pushed companies to expand data center facilities. For instance, Datacenter.com, the global carrier-neutral data center-as-a-service company, increased its data center floor area of AMS1 by 30% to 1800 square meters in October 2019 to meet for the demand of colocation space in Amsterdam.
Public cloud services dominate the data centers market in Germany. Government agencies are grown by private cloud services as they plan to make greater use of cloud services in public administration during the forecast period. However, hybrid cloud services have more substantial growth potential than private and public cloud services. The growth in cloud technology is, in turn, growing the market for data center interconnect market in the region.
Moreover, various governments across Europe are also increasingly emphasizing in adopting cloud solutions. For instance, the government of the UK spent GBP 1,192.5 million on G-cloud. Such developments are expected to influence the demand for the data center interconnects in the forecast period.
With the growing popularity of cloud solutions, coupled with industry applications, such as AI, 5G, and Edge computing, the demand for the data centers is growing, which, in return, is anticipated to give immense opportunities to the data center interconnect market.
Increasing adoption of 5G to Drive the Market Growth
The rapid increase in the development and adoption of 5G network will result in more data centers needed by business as a result of which the growth of data center interconnect will also grow. Also, 5G frequency mandates set by the Federal Network Agency in Germany states that 98% of households should be equipped with fast mobile internet by 2022 and all major motorways, highways, and railroads by 2024, which is expected to significantly increase the demand for small cell and NFV solutions in the country increasing the need of data center interconnect in the country.
The increasing demand for such services is dependent upon the network hardware and tower infrastructure of the service providers, and efficient data centers to handle the vast data generation. For instance, Deutsche Telekom maintains about 28,000 towers across Germany as of 2018 and estimated that that figure could even double with the rollout of 5G technology in the late 2020s.
France has the third-largest telecoms market in Europe, worth about EUR 31 billion annually. France-based telecom company Orange SA is one of the world's major players with a strong presence in the EMEA region. The company is working on its 5 year 'Essentials 2020' program focused on emerging markets as well as on investments in upgrading infrastructure within its European footprint.
The European data center interconnect market is highly concentrated due to higher initial investments and low availability of resources, which present challenges to this market. Some of the key players in the market are Cisco Systems Inc. and Huawei.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20210506005554/en/
Laura Wood, Senior Press Manager
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