December 2019, IDC #US45717419

IDC MarketScape

IDC MarketScape: Worldwide Colocation and Interconnection Services 2019–2020 Vendor Assessment

Courtney Munroe

IDC MARKETSCAPE FIGURE

FIGURE 1

IDC MarketScape Worldwide Colocation and Interconnection Services

Vendor Assessment

Source: IDC, 2019

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Please see the Appendix for detailed methodology, market definition, and scoring criteria.

IDC OPINION

This study leverages the IDC MarketScape methodology to evaluate several major colocation and

interconnection providers around the world. IDC identified several leading providers from North

America, Europe, and Asia/Pacific (AP). They are a diverse selection ranging in size and specialty.

IDC included both wholesale and retail-oriented companies and companies that also offer managed

services.

Colocation and interconnection services are defined as a customer's use of a third party's datacenter

facilities (i.e., physical floor/cage/rack space, network capacity, and HVAC/power infrastructure) in

which the customer operates its own servers/storage systems, network equipment, and other types of

infrastructure.

Over the past 12 months, the colocation and interconnection sector has experienced steady growth

driven by several key factors:

There is hyperscale demand for third-party facilities. Demand for space and power in the key technology corridors in Northern Virginia, New York, Los Angeles, and Atlanta continues unabated. The demand has also extended to second-tier cities and will fuel a wave of new

construction that will extend into 2020.

The consolidation and downsizing of enterprise datacenters continues to push traffic to

colocation providers. While enterprises are migrating workloads to public cloud environments, they also need consulting and managed cloud services that can be adequately provided by colocation providers. A diverse array of providers has emerged to cater to every need, whether

domestic, global, or specialized around managed services or bare metal facilities.

The colocation market is in transition. Some companies have retreated from managed

services to focus on the more lucrative hyperscale market. However, the enterprise segment represents a significant market opportunity for colocation and interconnection services. To leverage access to cloud providers, interconnection services will provide a more cost effective

and flexible networking service than traditional connectivity services.

Ancillary services such as access to virtualized workloads, security services, and on-demand

server capabilities will become increasingly important to colocation providers. The key to success will be the ability to offer the most efficient datacenters leverage highly automated

processes and fortresslike security environments.

IDC MARKETSCAPE VENDOR INCLUSION CRITERIA

IDC had two primary criteria for inclusion in this vendor assessment:

Companies with an international footprint in at least two continents

Companies with at least $500 million in annual revenue

Most companies qualified on both counts. The exceptions are CoreSite, which has only United States–

based properties and serves international locations via partners, and Rackspace, which qualified

based on its global reach but did not meet the revenue criterion.

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ADVICE FOR TECHNOLOGY BUYERS

Define your requirements: The colocation sector is in transition. The wholesale segment driven by the hyperscale sector is driving expansion and growth. This sector has very specific requirements for cooling and space, while the retail sector requires more hands-on managed

services. However, some companies are focusing less on retail and managed servicesbecause they lack the significant personnel and expertise as well as the capability to

implement finely honed automation and virtualized services.

Interconnection capabilities: The best providers will offer a wide range of network providers, internet exchange (IX) facilities, and access to major cloud providers. Some colocation

providers' on-net capabilities that offer WAN scalability and visibility will increasingly become

table stakes.

Ecosystem marketplace: Enterprises are downsizing in-house datacenters and increasingly leveraging colocation facilities to access software and hardware vendors for virtualized services, security services, and on-demand capabilities. Best-of-breed partnerships should be

easily accessible.

Consulting and cloud migration services: Some companies offer expertise to help enterprises

optimize networking and establish a cloud migration road map.

VENDOR SUMMARY PROFILES

This section briefly explains IDC's key observations resulting in a vendor's position in the IDC

MarketScape. While every vendor is evaluated against each of the criteria outlined in the Appendix,

the description here provides a summary of each vendor's strengths and challenges.

CoreSite

CoreSite is positioned in the Major Player category in the 2019–2020 IDC MarketScape for colocation

and interconnection services.

CoreSite operates 23 datacenters in 8 U.S. metro markets and international via partners. The company may have one of the smallest footprints in this study, but it has become a strong player in the interconnection and hybrid cloud sector. CoreSite was founded in 2001 as CRG West and rebrandedas CoreSite in 2009. The company operates datacenters in 8 major metro markets across the United States serving more than 1,350 customers and has a portfolio totaling more than 4.1 million total datacenter net rentable square feet (NRSF), which includes 1.7 million NRSF under construction or held for development.

Strengths

CoreSite is a major datacenter and colocation provider because of its locations in key markets and its strong SLA. The company offers a 100% uptime guarantee. The company's key focus area and differentiator is the provision of high-performance datacenter solutions in communication hubs. CoreSite supports hybrid and multicloud strategies through providing on-ramps to major public cloud and IT service providers. Since 2013, the company has operated the CoreSite Open Cloud Exchange, a one-to-many cloud platform launched in 2013, to increase API functionality, capacity management, and service provider availability. It also offers the marketplace that lists network operators, cloud providers, partner, and value-added service providers. The company is well respected in the industry for its high-performance capabilities and the diverse array of tier 1e cloud and network providers in its ecosystem.

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Challenges

CoreSite's key differentiator is the company's ability to maintain a high-quality of service (QoS) as

measured by low latency, high availability, and traffic throughput. While this has served it well so far,

the lack of owned international facilities to leverage growth in the Asia/Pacific and Europe could be a

possible growth inhibitor if the U.S. market slows down in the coming years.

Consider CoreSite When

The company provides high-performance datacenters to hyperscale cloud providers and large

enterprises alike that need scalable solutions as well as industry-specific secure and compliant

facilities. The company also offers migration capabilities to small companies that lack expertise in

colocation and cloud connect. Finally, it offers a diverse range of interconnection solutions to cloud

and network providers.

CyrusOne

CyrusOne is positioned in the Major Player category in the 2019–2020 IDC MarketScape for colocation

and interconnection services.

CyrusOne was launched in 2011, with the construction of a 1 million square feet facility in Phoenix,

Arizona. Over the past eight years, the company has grown steadily via acquisition and organically into

one of the largest midtier providers in the industry, with 45 datacenters in 4 countries and more than 4

million square feet under management. Over the ensuing years, CyrusOne launched a National

Internet Exchange. It acquired the datacenter facilities of Cervalis in 2015, which gave it a presence in

the New York market. The company has grown steadily and has established a strong niche as a

hyperscale provider with strong diverse industry solutions. CyrusOne has its own datacenters in North

America and Europe and partners with GDS in China and ODATA in Latin America to provide facilities

in those countries.

Strengths

CyrusOne has been a pioneer in this industry over the duration of its history. The company established

an industry-specific internet exchange and a National Internet Exchange several years ago. It has

focused on custom build to suit and rapid construction of hyperscale facilities, with full datacenter

construction in two to six months. The company caters to cloud and network providers with its National

IX platform. It also facilitates efficient connectivity for hybrid cloud configurations with its "Sky to the

Cloud" platform, which facilitates interconnection and edge-to-cloud connectivity. The company also

focuses on compliant-based facilities to several verticals, including federal, finance, and healthcare

segments.

Challenges

CyrusOne has a strong presence in the U.S. Northeast and Texas. It does have gaps in some major

cities in the Southeast and West Coast, although it does have plans to invest in additional cities, driven

by strong double-digit revenue growth.

Consider CyrusOne When

CyrusOne is ideally suited for hyperscale cloud providers and enterprises that need wholesale facilities

and rapid implementation of build-to-suit facilities. While the company is not in all major U.S. metro

markets, it is well represented in key European cities and has strategic partnerships in key metro

markets in Asia and South America.

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Cyxtera

Cyxtera is positioned in the Major Player category in the 2019–2020 IDC MarketScape for colocation

and interconnection services.

Cyxtera is a security-oriented datacenter and colocation company. The company was launched in May

2017 with the acquisition of CenturyLink's datacenter and colocation assets. This business was

merged with security portfolio of several companies including Cryptozone, Catbird, Easy Solutions,

and Brainspace. The company's key differentiation is that its portfolio extends beyond datacenter

space and power to the ability to offer complex hybrid IT services on a secure and resilient global

platform.

Cyxtera offers global services in 60 datacenters in 29 metro markets in North America, Europe, and

the Asia/Pacific region. The company serves over 2,300 companies and has 2.9 million square feet of

datacenter floor space with a 250MW capacity. Cyxtera is also a major interconnection provider,

offering interconnection to 600 networks and 120 network providers, as well as cloud access to all the

major public cloud providers. Cyxtera claims to be one of the largest interconnection capabilities in the

world, serving 40,000 cross connects.

Strengths

Cyxtera has carved out a strong identity around two key areas. The company has an organic heritage

as security company from its inception and has designed its portfolio with security in mind. It's a smart

move as security is a perennial concern of enterprises. "Security integrated as a core service,"

according to the company. This provides a strong advantage in key verticals such as government and

service providers. The other key foundation and unique aspect of the Cyxtera is its on-demand

dynamic software-driven functionality, the Cyxtera Extensible Data Center (CXD), which offers

programmable interconnection, and datacenter infrastructure, that is preconfigured and scalable.

Cyxtera has already recruited prominent infrastructure vendors as part of its catalogue (HPE and

Fujitsu) and is working to add more vendors to the marketplace.

Challenges

Cyxtera is a global company that lacks the scale and reach of the large global companies. It is also a

fairly young company that is punching about its weight. Given its short history, the company has done

well to gain traction in the industry largely because of its customer base and channel partners. It also

does not have an extensive global presence, although it does have datacenter locations in most major

metro markets around the world.

Consider Cyxtera When

Cyxtera offers a strong interconnection platform in key markets with all the major networking and cloud

providers. If you are looking for a managed services partner to provide a security road map, with an

elastic and programmable infrastructure requirement, Cyxtera is the ideal solution.

Digital Realty Trust

Digital Realty Trust is positioned in the Leader category in the 2019–2020 IDC MarketScape for

colocation and interconnection services

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Digital Realty was established as a REIT in 2004 IPO with 21 properties in North America. Over the

ensuing years, the company expanded to Europe and the Asia/Pacific region. The Telx acquisition in

2015 was a pivotal move that launched into the retail colocation and interconnection segment. Over

the past two years, the company has added major assets with strategic acquisitions and alliances in

Europe. These include Telecity in 2016, a joint venture (JV) with Mitsubishi to provide datacenter

solutions in Japan, and the Ascenty acquisition in Brazil, which provides a much-needed Latin America

presence. More recently, on October 29, Interxion accepted a bid of US$8.4 billion to be acquired by

Digital Realty Trust in what could be the largest datacenter deal in history. The addition of Interxion

datacenter sites expands Digital Realty's European presence from 4 countries to 11 and will expand

the total number of datacenters worldwide to 250, once the acquisition closes. Digital Realty now has

210 datacenters in 35 metro markets across 14 countries on 5 continents. Digital Realty is the second-

largest datacenter provider in the world.

Strengths

Digital Realty's strengths are its ubiquitous North American coverage, where it built its success on

rigorous facilities deployment, management and operations processes, and the ability to negotiate with

critical infrastructure providers. As a wholesale colocation provider, Digital Realty supports hyperscale

customers, and demand in this segment is strong. Over the past two years, Digital Realty has steadily

expanded into the retail sector as well as the Asia/Pacific and Latin America region. In November

2019, the company launched PlatformDIGITAL, which is a global scalable platform designed to enable

digital transformation in a consistent modular basis. The platform features four key solutions to solve

what the company terms as "data gravity challenges to enable digital transformation at scale." These

include:

Network Hub: A network optimization solution to consolidate and global traffic at major local

hubs

Control Hub: Adjacent security and IT tools and controls

Data Hub: Optimizes data aggregation, analytics, and streaming applications

SX Fabric: An SDN overlay that manages data traffic for optimized distributed workflow

Challenges

Digital Realty has done an admirable job of transform from a classic REIT to a differentiated company

with a diverse portfolio of services. The biggest challenge for Digital Realty will be to prove it can offer

a seamless global infrastructure that can scale more cost effectively than any provider. The company

is also striving to be a global retail and interconnection platform. Only time will tell whether it can offer

a more seamless and cost-effective portfolio in the Americas while competing effectively against the

strong regional players in Europe and Asia/Pacific.

Consider Digital Realty When

Digital Realty has implemented a strong road map for both hyperscale entities and global

geographically distributed enterprises. The company can provide gobs of wholesale space and power,

as well as required foundations to enable enterprise digital-ready foundation including networking, an

interconnection platform, and analytical and data management tools to facilitate the establishment of a

seamless global platform.

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Equinix

Equinix is a positioned in the Leader category in the 2019–2020 IDC MarketScape for colocation and

interconnection services.

Equinix has evolved steadily over the past two decades to become a global datacenter powerhouse.

With an optimistic outlook for strong future growth, the company is well poised to take advantage of

emerging IT innovation over the next few years.

The company has a mission to protect, connect, and power the digital world, and it has built a platform

with a solid investment strategy and a proven record of innovation to back its goal. Platform Equinix

was designed to reach everywhere, interconnect everyone, and integrate everything across 204 IBXs

in 53 metro markets in 24 countries across 5 continents. The company has 9,800+ customers,

including 2,900 cloud/IT providers, 1,800+ networks, and 3,000+ enterprises as well as 1,250+

financial services entities and 675+ content and media providers. These companies leverage the

platform to securely and privately exchange traffic across 356,000+ physical and virtual

interconnections. The company has a solid investment strategy and a proven record of innovation to

back its claims.

It has and continues to launch new services, including its most recently debuted, Network Edge

services, which is an innovation enabling companies to leverage the power of network function

virtualization (NFV) to modernize networks virtually by deploying on-demand services from an

ecosystem of vendors to dynamically connect their digital supply chains at Equinix. These types of

services will facilitate digital transactions closer to the digital edge where economies of aggregation

bring together customers, partners, employees, and clouds in most major metro markets around the

world.

Strengths

Equinix's strength is the company's comprehensive global footprint that has seen its brand become

synonymous with neutral colocation datacenters. It is at the center of the rapidly evolving cloud

marketplace ecosystem that facilitates a wide range of interconnection between diverse entities

ranging from network service providers, content providers, and public cloud providers to enterprises.

Equinix Cloud Exchange Fabric is an innovation that has simplified the concept of a global cloud

fabric. In combination with the strategic locations, access to the richest ecosystems, and ability to

integrate edge services on demand, Platform Equinix provides customers value that is extremely

difficult and expensive for its rivals to emulate. It also has a solid strategy in place to leverage the

surging growth in hyperscale cloud companies. Equinix datacenters focus on a select group of

hyperscale companies that offer significant value to the cloud ecosystem currently at Equinix. The

company has moved rapidly beyond the provision of space and power to the position of a digital

enabler for several verticals that are early adopters of cutting-edge digital platforms. These include

high-availability platforms for the financial sector, as well as scalability for content and media

providers. The deployment of core hyperscale infrastructure at Equinix serves as a magnet, creating a

gravity effect that attracts additional partners, application developers, and other hyperscale vendors to

Equinix's ecosystem, increasing the choice and innovation opportunities for current Equinix customers.

Equinix is also a leader in leveraging sustainable and renewable energy sources. Equinix was the first

datacenter company to publish a comprehensive ESG sustainability report and has also established a

goal of implementing 100% renewable energy. The company is also an early adopter of the VPPA

approach to the acquisition of large-scale renewable energy and regularly reports on its sustainability

efforts and achievements.

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Challenges

While Equinix has a broad and deep portfolio, it can be undercut on pricing by smaller regional

providers on single capabilities. However, if a wider lens is used, across a broader set of requirements,

its premium pricing is offset by much larger savings and benefits.

Consider Equinix When

You are a global enterprise or service provider that needs to remove the distance between your users,

cloud services, ecosystem partners, and customers across your edge to meet the high-performance

and low-latency demands of digital. As you transform your architecture to become digital ready,

consider Equinix when you are optimizing the network to reduce costs and improve scale across

strategic locations, simplifying hybrid multicloud access, distributing security controls to manage risk,

or distributing data and analytics to optimize edge computing needs. You require a high-availability

and scalable platform by a company that is also deeply devoted to sustainability.

Interxion

Interxion is positioned in the Major Player category in the 2019–2020 IDC MarketScape for colocation

and interconnection services.

Over the past two decades, Interxion has been one of the prominent European colocation and

interconnection services providers. The company has compiled an asset base that includes 53

datacenters in 13 cities in 11 countries across Europe. It provides colocation, datacenter facilities, and

other services to 2,000 customers, including 700 network providers, 20 internet exchanges, and

several hundred platform providers. Over the past decade, the company has grown steadily via

investment in real estate and strategic fiber landing facilities across the continent. On October 29,

2019, Digital Realty Trust and Interxion announced an $8.4 billion merger in which Digital Realty will

acquire the assets of Interxion and net debt.

Strengths

The company is first and foremost an interconnection provider that offers a comprehensive solution of

networking to internet exchanges, network providers, and cloud providers. It offers bespoke cloud

connectivity via VLANs to a wide range of cloud platforms. Its IX interconnect platform offers a high

number of IP Transit and Peering in Europe, supporting access to 20 internet exchange providers with

3,000 peering options. It also offers preconfigured cross connects supporting thousands of physical

cross connects annually. Finally, the company has strategic fiber landing facilities in Europe, with

facilities at key international gateway points to MEA, Asia, and the Americas.

Challenges

Interxion has done a great job providing a comprehensive platform for interconnection and colocation

in key European markets. While cloud connection continues to grow, the company faced saturation in

key European markets, with no presence outside Europe in key growth markets of the Americas, MEA,

and Asia/Pacific regions.

Consider Interxion When

For companies seeking access to key European markets and interconnection with networks and

internet peering companies, Interxion offers comprehensive coverage at key strategic gateway points

in Europe. The combination of Interxion and Digital Realty will bring a world-class global platform for

MNCs and cloud and network providers seeking access to the majority of key global markets.

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NTT Global Data Center Division

NTT Global Data Center Division is positioned in the Leader category in the 2019–2020 IDC

MarketScape for colocation and interconnection services.

In July 2019, NTT Ltd., based in London, United Kingdom, was launched. This is a new subsidiary of

NTT Inc. and is a consolidation of the global, non-Japanese segments of the 31 different brands

encompassed by NTT Communications, Dimension Data, and NTT Security. In FY18, NTT Ltd.

accounted for 58% of NTT Inc.'s total revenue.

NTT offers a tier 1 global IP network, spanning 44 metro markets around the world. It is still one of the

few network providers with a strong cloud infrastructure-as-a-service (IaaS) portfolio with the ability to

offer private cloud and managed public cloud solutions. The new datacenter unit includes internal NTT

assets and several companies acquired over several years, including DPA, e-shelter, Gyron,

Netmagic, NTT Indonesia Nexcenter, and RagingWire. NTT is also one of the top 3 datacenter

operators, alongside Digital Realty Trust and Equinix. NTT offers both wholesale and retail datacenter,

colocation, and cloud connect access with facilities in 20 countries. In October 2019, the company

reiterated its plans to continue investing in strategic growth metro markets around the world.

Strengths

NTT has 150 datacenter locations around the world in over 20 countries. The company has

approximately 4 million square feet of floor space under management and offers a diverse range of

compute, IT, and network services to both hyperscale companies and enterprises. While NTT is

primarily a hyperscale provider, it also provides what it terms enhanced IT capabilities to enterprises

including managed hosting, colocation, hybrid cloud services, and network services. Its network

services are marketed under the SD X brand. NTT's Software-Defined Exchange Services offers

colocation and cloud access to public cloud providers. This includes SD WAN and L2 connectivity to

network providers and IaaS providers. NTT's network backbone as well as datacenter facilities should

attract new clientele and expand wallet share with cross-sell/upsell opportunities in MNC

organizations.

Challenges

The key challenge for NTT as it moves forward is around branding and marketing. The company has a stellar reputation as a hyperscale datacenter provider. While it is well known in Japan and the AP region for its retail enterprise portfolio, it still lags behind in this segment in Europe and North America. NTT will also benefit in time from the transformation and consolidation of the various NTT divisions and subsidiaries.

Consider NTT Global Data Center Division When

The new NTT is a highly diverse ICT service provider and offers an unparallel portfolio of ICT services. NTT offers global MNCs a true one-stop capability that spans design, consulting, and systems integration to hybrid IT management and global software-defined networking and interconnection. NTTis also known of a high quality of service and offers a forward-looking road map that will allowenterprises to leverage a diverse range of expertise and cutting-edge facilities.

Rackspace

Rackspace is positioned in the Major Player category in the 2019–2020 IDC MarketScape for

colocation and interconnection services.

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Rackspace, the Austin, Texas-based managed cloud company, has a unique colocation market strategy. The company offers a comprehensive portfolio of life-cycle services to enable enterprise digital transformation. From managed hosting to managed private and public cloud to colocation, Rackspace offers the requisite consultation, migration, and operations support to facilitate digital transformation. Colocation is offered in the context of this overall life-cycle management approach. Rackspace is a relative newcomer to the colocation, entering this segment with the acquisition of Datapipe in mid-2018. The company offers colocation and interconnection services in 25 datacenters in North America, Europe, and Asia/Pacific. The company has 12 company-owned datacenters and leverages partner facilities in another 13 datacenters with plans to add several partner sites over the next several months.

Strengths

Rackspace provides a wide variety of services in addition to colocation services. The company does

not compete with the giants of the industry, but its differentiator is the ability to cloud enable companies

that are at the initial phase of migrating to the cloud. Because of comprehensive Rackspace Hosting,

Managed Hybrid Cloud ecosystem, it offers a wide range of initial "lift and shift" and a road map for

private cloud, public cloud, and interconnection services that can be scaled as companies grow and

become more adept at leveraging the cloud. Colocation is offered as piece of the puzzle. It is typically

not a leading offer but one of many capabilities that Rackspace can provide.

Challenges

Rackspace is not primarily a colocation provider, nor does it offer the scale of floor space and other

capabilities necessary to most effectively compete in this area. Therefore, it is not necessarily the first

choice for colocation. One of the key reasons is that since the acquisition of Datapipe, Rackspace has

not marketed colocation as key service offering. However, during late 2019, the company has

increasingly made colocation a more visible portfolio option, which could bode well for its future

growth.

Consider Rackspace Colocation When

If you are a company that is beginning the cloud journey, then Rackspace is an ideal company. It offers

a wide range of managed services and its "fanatical" support to guide companies with a road map. Its

global presence and scale via strategic partnership also offers large enterprises a strong global partner

that can ably fill gaps in their colocation requirements.

Telehouse

Telehouse is positioned in the Major Player category in the 2019–2020 IDC MarketScape for colocation

and interconnection services.

Telehouse is a subsidiary of the Japanese telecommunications service provider KDDI. The company

has been in operation since 1989, with the construction of its first datacenter in New York in 1989. The

company currently has 45 datacenters on several continents around the world, in over 23 markets in

the United States, EMEA, and Asia/Pacific. The company has aggressively expanded since its

founding, achieving several "firsts" with the deployment of colocations centers in London, Paris, South

Africa, and other locations in the 1990s. The company offers datacenters space and power and

interconnection services to network and cloud providers. It currently has 4 million square feet under

management.

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Strengths

Telehouse's key differentiator is the company's ability to offer services in emerging markets such as

Russia, China, and South Africa. In addition, the company also has a strong focus on customer service

and reliability, boasting 99.999% uptime, and its deep expertise of colocation and interconnection fed

by its 30-year-old heritage. The company offers shared, caged, and dedicated suites primarily to

enterprises as well as carrier interconnect and cloud connect to hyperscale providers via its Telehouse

Cloud Link platform. It also offers a suite of managed services ranging from basic remote management

to monitoring and disaster recovery.

Challenges

Telehouse is a strong competitor with a long heritage in the industry. It has stuck closely to its formula

of colocation, interconnection, and managed services. Its partnership with KDDI ensures the company

of a strong network and resource partner. It's not aggressive in terms of marketing and has made no

aggressive expansion since launching its second Osaka datacenter in 2015.

Consider Telehouse When

Enterprises that need colocation and interconnection services in major cities around the world will find

Telehouse a rock-solid provider, with extensive local knowledge and reliability in the top metro markets

around the world. The company also offers interconnection with a large number of network and

internet peering companies. It also has the advantage of being affiliated by one of the largest and

innovative Asian networking entities in KDDI.

APPENDIX

Reading an IDC MarketScape Graph

For the purposes of this analysis, IDC divided potential key measures for success into two primary

categories: capabilities and strategies.

Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well

aligned the vendor is to customer needs. The capabilities category focuses on the capabilities of the

company and product today, here and now. Under this category, IDC analysts will look at how well a

vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market.

Positioning on the x-axis, or strategies axis, indicates how well the vendor's future strategy aligns with

what customers will require in three to five years. The strategies category focuses on high-level

decisions and underlying assumptions about offerings, customer segments, and business and go-to-

market plans for the next three to five years.

The size of the individual vendor markers in the IDC MarketScape represents the market share of each

individual vendor within the specific market segment being assessed.

IDC MarketScape Methodology

IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC

judgment about the market and specific vendors. IDC analysts tailor the range of standard

characteristics by which vendors are measured through structured discussions, surveys, and

interviews with market leaders, participants, and end users. Market weightings are based on user

interviews, buyer surveys, and the input of IDC experts in each market. IDC analysts base individual

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vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and

interviews with the vendors, publicly available information, and end-user experiences in an effort to

provide an accurate and consistent assessment of each vendor's characteristics, behavior, and

capability.

Market Definition

Colocation services are defined as a customer's use of a third party's datacenter facilities (i.e., physical

floor/cage/rack space, network capacity, and HVAC/power infrastructure) in which the customer

operates its own servers/storage systems, network equipment, and other types of infrastructure.

Retail colocation: This segment includes the rental of rack/cage/cabinet space in the datacenter, network capacity within the datacenter, and access to/use of critical facilities infrastructure such as power and cooling. The customer retains ownership of the equipment

housed in the datacenter (typically servers, storage, and networking devices such as firewalls and load balancers) and controls and manages the IT environment. Contracts are typically

short to medium term in duration and include a reserved amount of power per rack.

Wholesale colocation: In this segment, the customer leases the building/shell or data hall/suite level rather than the smaller scale of retail colocation (racks/cages/cabinets). Projects

generally involve heavily customized builds, although many operators in this segment are moving toward a mix of build-to-suit and turnkey offerings. Customers of wholesale colocation are typically hyperscale content and media/entertainment providers, scale-oriented cloud

service providers, and hosting, IT managed services, and telecommunications companies.

Interconnection: Colocation providers facilitate digital exchange points for network providers,

internet peering providers, cloud providers, content providers, managed service providers, and enterprises to connect to each other's networks. The modern hyperconnected digital ecosystem relies on low-latency, scalable bandwidth. These carrier-neutral facilities offer

direct one-to-one, one-to-many, or many-to-many connectivity as required by each segment. This is an essential aspect of the colocation business and will become increasingly important

in the future.

Managed services: Colocation providers also offer a range of managed services to enterprises including remote configuration, on-demand compute, and server capabilities, as well as

monitoring, security, and cabling services.

Strategies and Capabilities Criteria

Tables 1 and 2 include market-specific definitions and weights specifically tailored for colocation and

interconnection providers. This was used to measure vendor's performance and their specific place on

the IDC MarketScape chart. Table 1 shows the definitions and weighting criteria used to evaluate

colocation and interconnection providers' strategies. Table 2 shows the definitions and weighting

criteria used to evaluate colocation and interconnection providers' capabilities.

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TABLE 1

Key Strategy Measures for Success: Worldwide Colocation andInterconnection Services

Strategies Criteria Definition Weight (%)

Functionality or offering strategy The vendor has a road map based on customer and partner input that

covers space, power, interconnection, and other services.

10.00

Financial/funding The vendor demonstrates consistent growth or increase in market share. 5.00

Growth The vendor has plans to expand service beyond its core segment of

power and space.

15.00

Innovation The vendor demonstrates its ability to offer innovative solutions

anticipating market needs while staying ahead of the competition.

15.00

Delivery The vendor demonstrates plans of datacenters expansion. 20.00

Interconnection strategy The vendor offers an on-net global cloud fabric. 20.00

R&D pace/productivity The vendor has strong R&D program in partnership with key industry

players.

5.00

Channel strategy The vendor has a strong channel strategy. 10.00

Total 100.00

Source: IDC, 2019

©2019 IDC #US45717419 14

TABLE 2

Key Capability Measures for Success: Worldwide Colocation andInterconnection Services

Capabilities Criteria Definition Weight (%)

Portfolio benefits The vendor offers a wide range of space, power, a large number of

interconnection partners, and enhanced services.

20.00

Functionality or offering The vendor has a well-defined target segment. 15.00

Range of services The vendor offers significant floor space, geographical diversity,

and access to a wide range of cloud partners.

15.00

Customer service delivery The vendor offers global service on multiple continents. 10.00

Customer satisfaction It is the vendor's ability to offer basic and enhanced services. 10.00

Other resources offered The vendor offers diverse use cases, design, and consulting road

map.

10.00

Sustainable energy usage The vendor leverages solar, water, or innovative sustainable

energy adoption.

5.00

Total cost of ownership of

product/offering to IT buyer/user

The vendor demonstrates measurable efficiency of outsourced or

managed services capabilities.

15.00

Total 100.00

Source: IDC, 2019

LEARN MORE

Related Research

U.S. Enterprise Communications Survey, 2019: Hosting and Colocation Services (IDC

#US44792219, November 2019)

Market Analysis Perspective: U.S. Hosting and Colocation Services, 2019 (IDC

#US45541019, September 2019)

Synopsis

This IDC study presents a vendor assessment of the 2019 colocation and interconnection vendor

market using the IDC MarketScape model. This assessment covers nine key colocation service

providers on a worldwide basis. The assessment is based on current and future capabilities with a

view of presenting a comprehensive analysis of enterprise requirements.

©2019 IDC #US45717419 15

"The migration to digital platforms, as well as the requirement for seamless and efficient

interconnection to network providers, and cloud platforms is strong driver for the colocation and

interconnection market for enterprises, content, and service providers. Colocation facilities offer

additional enhanced and efficient options for service providers and enterprises alike and will continue

to drive growth of the digital ecosystem," according to Courtney Munroe, GVP, Telecommunications

Research at IDC.

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