Equinix and Digital Realty rule Q1 colocation with or without M&As

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Equinix and Digital Realty were already the clear leaders in the colocation market in Q1 2017 even before factoring in their recent M&A deals, according to Synergy Research.

Equinix recently completed the acquisition of 29 major data centers from Verizon, while Digital Realty and DuPont Fabros have announced their intention to merge. Q1 data from Synergy shows that Equinix and Digital Realty accounted for 11% and 7% of worldwide colocation revenues, respectively.

Had those major M&A deals been effective from the beginning of the year, Equinix worldwide market share in Q1 would have been 13% and Digital Realty 9%.

Their closest competitors are NTT with a 6% market share, KDDI/Telehouse with 3% and a group of operators that each has a 2% 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 colocation, while Digital Realty/DuPont Fabros would have had a 31% share of the smaller wholesale segment.

The Q1 data, covering both wholesale and retail colocation, 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 colocation 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.”

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