Synergy: U.S., Japan, UK and China drive worldwide retail colocation revenues

Colocation revenues continue to rise, a trend that Synergy Research Group said continued into the third quarter with the United States, Japan, United Kingdom and China being the dominant regions of growth.

The research firm revealed that seven of the largest country markets now make up 69 percent of worldwide retail colocation revenues, with the U.S. itself accounting for nearly 35 percent.

In the U.S., the colocation market is led by three main service providers: Equinix, CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ). Both CenturyLink and Verizon reported growth in their colocation business during the third quarter. CenturyLink reported third-quarter 2014 colocation revenues of $163 million, up 4.5 percent over the same period a year ago, while Verizon said that strategic services such as colocation and Ethernet rose 1.0 percent year-over-year to $2.1 billion.

Despite the gains CenturyLink and Verizon made, Equinix remains the leader in three of the top seven countries, while Interxion's broad European footprint has enabled it to establish a dominant presence in three out of the seven markets.

While the Japanese market has traditionally enjoyed a No. 2 spot in the ranking, Synergy said that the 2013 devaluation of the Yen allowed the UK and other large colocation markets to narrow the gap.

From an overall worldwide perspective, retail colocation revenues continue to grow at about 10 percent per year, but China's growth rate is more than double the worldwide average. Likewise, Netherlands, Germany and the UK are also growing at above-average rates.

Synergy said that there are 20 countries that each generates at least $100 million in annual retail colocation revenues. Interestingly, wholesale colocation revenues, while only a quarter the size of retail colocation, are growing at a slightly faster pace.

For more:
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