China datacenter colocation market to quadruple by 2016

Companies looking to bypass Internet traffic networks are turning to datacenter colocation service providers to help mitigate interconnectivity issues in China, spurring growth in this market sub-section.

China's colocation market is set to grow at a compound annual growth rate of 40 percent, reaching 380 percent of its current size by 2016.

China's datacenter colocation market is set to grow at a 40 percent compound annual growth rate (CAGR), as companies in the country look to bypass Internet traffic bottlenecks experienced on traditional interconnection routes.

Datacenter Dynamics released its study recently, revealing the quadrupling of the colocation market's CAGR to 380 percent by 2016. By comparison, China's overall data center market is only projected to achieve a CAGR of 20 percent during the same timeframe, it noted.

According to Hawkins Hua, author of the report, the inherent complexities involved in network interconnectivity in China is causing an increase in Web traffic bottlenecks. This, in turn, has led to increased use of colocation facilities by enterprises wishing to bypass traditional interconnection routes, he said.

"Although the market is still dominated by the state-owned telecom carriers, there is a growing market for carrier-neutral [colocation] providers who are proving popular with enterprises," Hua said.

State-owned telecom carriers dominate two-thirds of the datacenter colocation market in China, but there has more carrier-neutral service providers entering the scene, albeit still reliant on the state-owned giants for space and network provision. These multinational companies are gaining a foothold in the market through strategic partnerships with local firms, the report noted. 

California-based Equinix, for example, entered China in 2010 by partnering system integrator Shanghai Data Solutions and using the Shanghai-based company's data center to provide services in the country, according to the report.