$432B Will Be Invested In Data Centers By 2025: Report

Technology trends like the Internet of Things and big data will drive a sustained surge of data center investment, according to a new report.

Analysis firm Frost & Sullivan forecast that by 2025, investments in the data center market will reach $432.1B, representing compounded annual growth of 10%. In 2019, $244.7B was invested in data centers. 

Increased usage of IoT and data, growing adoptions of hybrid cloud models, and growth in emerging economies are some of the key drivers of the growth, said Frost & Sullivan research analyst Majoj Shankar in a statement.

"The move from enterprise to cloud and colocation data centers will gain momentum because companies can reduce capital and operational costs by avoiding investments in hardware or software infrastructure and reducing maintenance and space requirements," Shankar said. "Additionally, 5G will move processing closer to the point of data collection, leading to increased deployment of micro and edge data centers and driving investments in new and next-generation data center technologies."

The growth in data centers won’t be evenly distributed across regions, however. Asia-Pacific is poised to overtake North America as the largest data center market by 2025. Europe, the Middle East and Africa will be third-largest by that time.

The expected growth raises the stakes for data center developers and operators, who must keep up with fast-evolving demands such as for micro or modular data centers that can help deliver connectivity and services to farther-flung users outside of major markets.

Security will likely be a growing concern, with companies opting to keep critical data in-house or nearby, Shankar added.

"Further, given the high demand for modular data centers and competitive pressures, modular data center manufacturers need to innovate in this space and come up with advanced concepts that allow additional flexibility and modularity,"  he said.