Recent Trends for Colocation Providers

Today, data centers are one of the hot topics being discussed everywhere and anywhere. And, once someone finds out I work within the data center industry, I am often asked about the industry as if I speak for all professionals in the data center universe.

So, as the official spokesperson for all of us who claim the data center world as our own (/sarcasm), here are 4 recent trends I am seeing: 

1. Longer Lead Times to Quoting
With so many new faces entering the data center space, major data center providers are spending more time verifying the validity of the lead itself. Depending on your requirement, the data center provider may require corporate financials to prove capital before even starting the quoting process. Even after verification, it takes some major providers 2-3 weeks to provide a quote. To speed things up, some end-users are working with colocation providers who have space within the major data centers around the U.S. by either going directly with the colocation provider or using them as a partner to work within these major data centers.

2. Skyrocketed Cost in Major Cities
As available space and power in major cities are becoming increasingly harder to find, simple economics is making at play – you know, supply and demand. For the providers who have availability, they are charging a premium for it. Not wanting to pay a premium for services, companies are going to nearby data centers and getting direct connections to those pricey locations.

3. Network vs Power Costs
With the increase in demand for data center services, some companies are having to choose a provider based on cost, not service. This, of course, can leave the company at risk. It appears many companies are having to choose between paying for networking or paying for power (or, heck, they find a gem that can offer them both at a price they can afford). It is important to note, utilities organizations are working tirelessly to expand offerings in both power and networking to data centers around the U.S. In other words, what is their “max” and most “connected” option today, isn’t what it will be in 3-5 years.

4. Increase in Contract Terms & Metered Power Options
The days of month-to-month contracts are over - most data center colocation contracts are now for a minimum of 2-years. And each added PDU or cab or kW is another 2-year term. Each contract is longer and with a larger “annual increase” then ever before. This is leaving companies stuck in less desirable circumstances as AI workloads fluctuate in the beginning stages. These fluctuating conditions have more companies looking for metered power solutions.