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Equinix and Digital Realty lead worldwide co-location market

Co-location market leaders in Q1 2017 (source: Synergy Research Group)Equinix and Digital Realty are already growing more rapidly than the overall worldwide co-location market, according to Synergy Research Group's (SRG) latest research.

The two companies are the presently the clear leaders in the co-location market, which account for 11% and 7% of worldwide revenues respectively, based on new Q1 2017 data from SRG.

On May 1, Equinix completed its acquisition of 29 major data centers from Verizon. On June 9, Digital Realty and DuPont Fabros announced they would merge in a deal that should close later this year.

Had those major M&A deals been effective from the beginning of the year, Equinix and Digital Realty would have had a worldwide co-location market share of 13% and 9% respectively, SRG stated.

Their closest competitors are NTT with a six percent market share, KDDI/Telehouse with three percent and a group of operators that each has a two percent share -- including China Telecom, CenturyLink (now Cyxtera), CyrusOne, Global Switch and Interxion.

Across the two major market segments, Equinix/Verizon would have had a 17% share of retail co-location, while Digital Realty/DuPont Fabros would have had a 31% share of the smaller wholesale segment.

A booming cloud market and other industry trends mean that scale and geographic scope are increasingly vital to success in the co-location market. The two leaders continue to pull away from the competition.

Steady market expansion

The Q1 data, covering both wholesale and retail co-location, shows that the market continues to expand steadily across all regions, with APAC having the highest growth rate.

The major countries with the highest growth rates were all in the APAC region -- China, Hong Kong, Japan and Australia.

Across the major regions, Equinix was the leader in EMEA, ranked second in North America and third in APAC. Digital Realty was the leader in North America and NTT the leader in APAC. The two M&A deals are focused almost entirely on the US market and will increase substantially US revenues for both Equinix and Digital Realty.

The merged Digital Realty/DuPont Fabros will maintain a narrow lead over Equinix/Verizon in the US.

"The aggressive growth of hyperscale data center operators and other cloud and hosting companies is helping to drive demand for data center footprint across all regions, while many enterprise customers require their data center operators to span multiple metros and countries," said John Dinsdale, chief analyst and research director at Synergy Research Group.

"These fundamental market drivers mean that co-location is increasingly a market where scale and geographic scope determines success. There has been a lot of consolidation in the data center industry already in 2017, but these two deals stand out. Equinix and Digital Realty were already growing much more rapidly than the overall market, and these deals will help them to further distance themselves from the competition."