Australia's datacentre services revenue in 2014 totalled AU$826 million, a growth of 18.3 percent over 2013, according to a report by market researcher firm Frost & Sullivan.
The report, Australian Data Centre Services Market 2015, said the Australian outsourced datacentre market continued to grow strongly, due to the increased adoption of cloud computing, driven by the consumer segment's increased consumption of videos, social networks, mobile data and gaming, and the corporate sector's use of data intensive applications.
The research company expects Australia's high growth phase of outsourced datacentre adoption to peak in 2015 -- a growth of 18.2 percent -- and ease off in 2016 and 2017, as the rate of new datacentre capacity entering the market slows down.
Frost & Sullivan have predicted that from 2015 through 2020, the market will grow at a compounded annual growth rate of 13.7 percent, and that managed hosting will experience stronger growth than collocation over this period, citing it will be driven by the migration trend of companies from collocation to cloud services.
According to the report, collocation services currently account for approximately 69 percent of the total datacentre services market.
Phil Harpur, senior research manager ANZ ICT practice at Frost & Sullivan, said wholesale datacentre providers and those that focus on collocation services only face significant pressure because of this trend. He said the growth of cloud services has been a key factor in developing new business opportunities for datacentre specialist providers.
"As the Australian datacentre services market expands, diversifies and matures, there are growing opportunities for niche providers specialising in specific verticals to enter the market," Harpur said.
"To cater to the growing demand for datacentre services, specialist providers -- including local and global providers -- have added datacentre capacity, either by expanding their existing datacentre facilities or building new ones.
"A growing trend for large IT service providers and telcos that own their own datacentres is to consolidate their datacentre footprint by shutting down older, less efficient datacentres and leasing space within the larger and newer facilities of these datacentre specialists, as it is more cost effective."
The report also said that datacentre providers face several challenges.
"Significant new datacentre capacity has entered the market over the last few years causing lower than average occupancy rates, and placing downward pressure on datacentre pricing, however, additional capacity is generally being absorbed quickly," the report said. "Securing sites in CBD locations and gaining access to sufficient power is increasingly challenging and it is becoming increasingly difficult for datacentre owners to plan for additional capacity."
Harpur added that another growing trend seen over the last two years has been commercial property owners acquiring existing datacentres or building new datacentres, and then leasing them to datacentre specialist providers, IT service providers, or individual companies.