Research article

Bubbling data centres’ ecosystem

Consolidation amongst service providers is surging. The amount of data centre M&A hit a record high in 2020

The surging demand for cloud and colocation services has triggered a hunt fight for scale and global footprint within the industry, notably between giant IT companies and smaller market players. Since 2015, consolidations amongst service providers have been increasing with a peak recorded in 2017 when Digital Realty acquired DuPont Fabros for $7.6bn. Digital Realty and Equinix, the world’s two leading colocation providers account for 35% of the total deal value recorded since 2015.

2020 will set a new record with the acquisition in March from Digital Realty of the Dutch data centre company Interxion for $8.4bn. This is the largest ever data centre M&A transaction. The 53 Interxion European data centres (mainly based in the FLAP) provide Digital Realty with a leadership position in the EMEA. According to Synergy Research Group, a few other potential multi-billion dollar deals are pending closure.

Additionally, due to the rise of edge computing, an ecosystem of modular data centre operators has emerged in the past few years, including companies like Vapor IO, EdgeConneX, EdgeMicro, DartPoints, DataBank, Baselayer and Switch. M&A within this ecosystem has already started notably attracting traditional large colocation market players. In 2018, Compass Datacenters acquired EdgePoint Systems. Last year, in order to address 5G network transformation, Intel bought Smart Edge for $27m.

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