Consolidation will transform the multi-tenant data centre (MTDC) market as large players will increase market share, leaving the smaller providers to focus on diversification to survive.
Analysts predict that acquisitions within the industry will be driven by data regulation requirements, increasing demand for high-quality data centre space, latency concerns, and a need to differentiate between footprint, connectivity or services.
According to 451 Research, smaller businesses will have to focus more on services and areas of core competency to compete, led by the creation of new divisions between regional, international and pan-European wholesale and collocation providers.
As an example, the intention expressed by TelecityGroup to buy Interxion would give the company 7% of the total operational data centre space in Europe.
However, Equinix’s surprising bid to also acquire TeleCity could see the colo provider hold 9% of European data centre floor space.
Forecasters project that the global collocation market’s annualised revenue will reach $36bn by 2017, with 7.4m sq ft of colo space added to the continental market by then.
Penny Jones, Senior Analyst at 451 Research, said: "Our analysis suggests that MTDC providers in Europe will become more cautious bringing supply to market – in some cases, these providers may choose to expand in partner collocation facilities where cloud or other nodes exist.
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"We do not, however, expect to see huge revisions in build plans until 2016. Overall, the industry needs to be careful that such M&A activity – or expectations around it – does not lead to data centre stocks becoming overvalued. A cautious approach will need to be taken to ensure key company stock is not put at risk."
