Hyperscale data centers now account for over 40% of total global data center capacity, and there are over 1,000 of them currently in operation worldwide.
New data from Synergy Research Group shows that just over half of hyperscale capacity is now in purpose-built data centers, with the rest in leased facilities.
And while non-hyperscale colocation capacity accounts for another 22% of capacity, local data centers only account for 37% of total capacity.
According to Synergy, this is in stark contrast to six years ago, when nearly 60% of data center capacity was located in local facilities.
At the end of last year, the United States accounted for more than half of the world’s hyperscale data center capacity, while Europe and China accounted for 17% and 16%, respectively.
Of course, Amazon, Microsoft and Google are the leaders in this regard and all three are competing fiercely for a share of the global generative AI market.
“The composition of data center capacity varies quite a bit from region to region. For example, hyperscale data center capacity is much more widespread in the U.S. than in Europe or the Asia Pacific region,” said John Dinsdale, principal analyst at Synergy Research Group.
“However, overall trends are moving in the same direction – and it’s easy to see what’s behind these trends. In 2012, companies spent twelve times as much on their data center hardware and software as they did on cloud infrastructure services, while today they spend three times more on cloud services than on their own data center infrastructure.”
The expansion of hyperscale data centers shows no signs of slowing down
Looking ahead, Synergy expects hyperscale operators to account for over 60% of total capacity by 2029, while on-premise providers will fall to just 20%.
Global demand for data centers is expected to continue growing rapidly, primarily because hyperscale capacity is expected to nearly triple over the next six years.
While the colocation share of total capacity will slowly decline, according to Synergy, colocation capacity will actually continue to rise steadily. The on-premise share will decline by almost three percentage points annually, but the actual capacity of on-premise data centers will remain relatively stable.
Dinsdale pointed out that the key to the rapid growth in hyperscale data centers is the tremendous growth in SaaS and consumer-facing digital services such as social networking, e-commerce and online gaming.
“Companies are also choosing to house an increasing proportion of their data center equipment in colocation facilities, further reducing the need for on-site data center capacity,” he said.
“The rise of generative AI technology and services will only exacerbate these trends over the next few years, as hyperscale operators are better positioned to run AI operations than most enterprises.”
A report by CBRE earlier this year found that last year was the second time in five years that demand for data centers in Europe exceeded supply.
“Hyperscalers have been looking for increasingly larger facilities tailored to their needs for some time,” said Kevin Restivo, head of European data center research at CBRE.
