Data center market braces for AI explosion
Recently, an explosion of AI success stories and investment announcements has captured the attention and imagination of the business community.
Given the recent media frenzy over artificial intelligence, new research from Omdia shows that the data center market has a heightened awareness of practical applications of artificial intelligence that promise to increase productivity and reduce costs. According to the researchers, the collective evidence so far suggests this won't be just a blip.
Colocation businesses, including multi-tenant and single-tenant data center providers, are expected to benefit from this new wave of artificial intelligence growth.
Some of these companies have adapted their data center designs to achieve higher rack power density. Servers configured for AI training have power consumption similar to high-performance computing (HPC) clusters used for scientific research.
Omdia Principal Analyst Alan Howard said: "Colocation providers that can offer the highest rack density and liquid cooling will now have the upper hand in the data center space market."
From Omdia Project 's research shows that the hosting market continues to grow strongly, and the proliferation of artificial intelligence hardware may become an additional driver of growth.
According to Omdia's "Managed Services Tracking Report - 2023", the hosting industry is quite healthy and is expected to reach $65.2 billion by 2027, with a 5-year compound annual growth rate of 9.4%.
Depending on how AI hardware deployment accelerates, colocation data center revenue could see a significant boost in the coming years.
The top three hosting service providers in the world are Equinix, Digital Realty and NTT Global Data Centers (NTT GDC). They operate over 700 data centers and have over 100 ongoing construction projects, as detailed in Omdia's Data Center Construction Tracker - 1H23.
According to Omdia’s Managed Services Tracker Report - 2023, these three companies account for 33% of total revenue of $41.6 billion in 2022.
Omdia said that not all data centers can handle artificial intelligence or high-performance computing equipment, but these companies and many other noteworthy hosting providers have foreseen this emerging growth trend.
The data centers built over the past few years, and many data centers under construction, are designed and architected to accommodate these high power density equipment racks.
These data center design and architectural features include high-density power distribution management and precision cooling for thermal management to protect servers.
In some cases, colocation customers require liquid cooling directly to the chip, which requires special data center piping design to provide the customer with a liquid cooling loop, or the option to install an immersion cooling tank to convert the most Hot servers immersed in non-conductive liquid.
Howard concluded: "Achieving these advanced data center operational features is not for the faint of heart, nor is it for companies averse to high capital expenditures."
"Like Equinix, Digital Realty, NTT GDC, Flexential, DataBank, Compass, Aligned, Iron Mountain and many others are risking capital to build data centers so that enterprises and cloud service providers don't have to."
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