Datacenters decline as users turn to rented servers


Datacenters are declining worldwide both in numbers and square footage, according to IDC — a remarkable change for an industry that has seen booming growth for many years.

Users are consolidating datacenters and increasingly . These two trends are having a major impact on datacenter space.

The number of datacenters worldwide peaked at 8.55 million in 2015, according to IDC. That figure began declining last year, and is expected to drop to an expected 8.4 million this year. By 2021, the research firm expects there to be 7.2 million datacenters globally, more than 15 percent fewer than in 2015.

The global square footage of datacenters, after recent boom times, is also expected to slide. In 2013, datacenters totalled 1.6 billion square feet. That was when big service providers like Amazon, Microsoft, and Google were building — pushing square footage globally to 1.8 billion this year.

for the trend.

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Consider the , said Tad Davies, who heads consulting services at Bick Group, a datacenter consultancy. “Easy to move to and eliminates infrastructure in my datacenter,” he said. “Same for CRM.”

Consolidation is also playing a role, said Davies, as are new approaches to computing. New firms are adopting “cloud first” strategies, he said. “As they grow into larger organizations, the datacenter is never created.”

— have been shrinking their datacenter space to drive efficiency. Better server utilization often means more consolidation.

While the biggest decline is affecting in-house datacenters, said IDC, service provider datacenters continue to expand. But even there, the pace of growth is moderating as the market matures.

Despite stagnant growth, datacenters are still needed, Davies said. That’s because there’s limits to what can go into the cloud.

“Many applications that end users have built and further refined over the years are not cloud compatible,” he said. “To get there requires significant re-architecture as well as investment.”

The cloud is not necessarily less expensive than an on-premise operation, said Davies. But it does provide speed, flexibility and an operating expense, or opex, model.

In terms of revenue, the datacenter system market, which includes software and hardware, is barely growing, according to research firm Gartner.

“Enterprises are moving away from buying servers from the traditional vendors and instead renting server power in the cloud from companies such as Amazon, Google, and Microsoft,” said John-David Lovelock, research vice president at Gartner. “This has created a reduction in spending on servers, which is impacting the overall datacenter system segment.”

Last year, spending on datacenters declined 0.1 percent, said Gartner. This year it’s expected to increase by only 0.3 percent.

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