Despite the growing hype surrounding cloud computing, the colocation industry is still far from becoming irrelevant. In fact, a study from IMS Research (an IHS company), projects that demand for colocation will continue to rise significantly over the next several years.

“The North American colocation sector generated $6.5 billion in revenue in 2012, and is expected to grow to $10 billion by 2017” (Source Data Center Knowledge 2013)

Another report, from Research and Markets, estimates that the colocation industry will grow at a CAGR of 13.36 percent from 2012 to 2016 (Source Research and Markets 2013). The report also indicates that prices for colocation services continue to fall while the demand increases; demonstrating the extreme level of competition that exists between colocation providers today.

Currently, the majority of data center facilities in the US reside in only a handful of metropolitan areas. According to research from The 451 Group,

The top data center markets by operating square feet are, New York, North Virgina, Silicon Valley, Dallas, Chicago and Los Angeles and despite enormous expansion each year, demand is expected to continue to outpace growth. Incredibly, 191 providers host nearly 800 facilities located in just the top 20 markets in the US. (Source: North American Multi-Tenant Datacenter Supply: Emerging Major Markets 2012)

While not conclusive on its own, this data strongly suggests that the colocation industry has become focused on specific geographic areas rather than national coverage. Quality colocation facilities are fairly rare in non-metropolitan areas because of limited access to utilities, geographic concerns and a smaller volume of potential customers.

However, expanding into new territories has always been a major financial risk for colocation providers. Traditional data center planning strategies rely on economies of scale to manage costs over the lifetime of a data center facility. Data centers are typically built to support projected future demand and, as such, up-front construction and utility expenses make expansion a risky proposition.

At DartPoints, we have the advantage of being highly scalable and largely location-independent. We can deploy new, “right-sized” data centers effectively anywhere in the US, within approximately 60 days. Partnering with other colocation providers is logistically beneficial to DartPoints and our partners enjoy some important competitive advantages.

Eliminate risk by “paying as you grow” with DartPoints in Private Colo™ or limited multi-tenant facilities in nearly any city in the US. Instead of building data centers based on imperfect projections of future demand, expand as demand increases with our just-in-time, private colocation service plans.

Translate the capital expenses of deploying new data centers into manageable monthly leases.

Grow where your customers go. When they expand, or change locations, keep their business by leveraging DartPoints to provide a data center in their area.

Explore the viability of new geographical areas without capital risk.

Find new ways to ‘diversify your portfolio’ and gain a competitive edge.

As the demand for colocation continues to rise, competition will inevitably become more fierce and profit margins may diminish. Establishing strategic partnerships along the way will provide forward-thinking colocation providers an edge in an increasingly dense marketplace.

Our mission at DartPoints isn’t to dominate the colocation market or even to compete directly with other colocation providers (though we do offer retail colocation as well). Our goal is to provide a scalable, distributed Tier* quality infrastructure as a new option for colocation providers, small-to-medium-sized businesses and the enterprise alike.

Private Colo™, is our premium-quality service plan, designed specifically with the growing colocation provider in mind. If the idea of opening new facilities without the commitment and costs of a traditional build-out piques your interest, please contact DartPoints for a complimentary evaluation and a tour of our facilities.

This post was written by Nathan Binford, to reflect the views and opinions of the team at DartPoints. Nathan is the primary blogger for DartPoints and contributes to a variety of other sites and publications as well.