Are data centers expanding, modernizing or shrinking? According to a recent Network World article, “Companies might not be physically building brand new, centralized data centers, but they are modernizing their existing data center facilities and expanding their data center footprint to edge locations.”
Not only is the definition of the traditional data center morphing but different types of data centers are more prevalent. Basically, a data center is where a business or a third-party provider houses IT infrastructure and all the physical and virtual systems, networks, applications, and overhead (space, power, cooling, racks, cabinets, cabling, etc.) that make a data center operational. However, as we’ll explore in this article, various data center flavors have come online, expanding the market’s definition of where its IT infrastructure lives.
Making sense of today’s evolving data centers
Data centers will continue to evolve as digital technology advances. This means that the traditional definition of the data center is also changing. Here are some examples from the data center landscape as we know it today:
- On-premises data centers are owned by private or public organizations to house their own IT infrastructure. However, the expense of enterprises owning and operating their own private data center, the adoption of cloud computing and the impact of the global COVID-19 pandemic is causing a large amount of on-premises data centers to consolidate and close. According to a 2022 study, more than half (51%) of IT professionals said they were planning to close all of their on-premises data centers in the next 24 months. In that same study, another 27% said they would eliminate at least some of their facilities. As a result, displaced infrastructure will need to be redeployed elsewhere—to the cloud or to colocation data centers, for example.
- Colocation data centers are owned and operated by independent providers and designed for multiple private or public organizations to house their IT infrastructure in the same facility. With colocation data centers, IT organizations can lease space, power, cooling, and data center management and support services. In some cases, such as with Equinix, enterprises can also contract for interconnection to connect to their business partners and digital infrastructure services (e.g., CPU, storage, networks, etc.), to reduce the CAPEX of owning and managing their own data centers. Increasingly, both traditional IT organizations and newer cloud-native companies consider colocation data centers with digital services their new “on-premises” facilities to more efficiently operate and scale their IT operations. This allows companies to focus on meeting changing customer requirements and growing their business, rather than the day-to-day operations of their data centers. According to IDC, “Datacenter providers are in an ideal position to facilitate a strategic road map to help enterprises move the needle on digital transformation.”
- Hyperscale/IaaS data centers are typically owned and operated by cloud or as-a-service (aaS) providers, such as AWS, Microsoft, Google and Meta. These high-capacity data centers have increased in prominence with hyperscalers offering pay-as-you-go virtualized services (e.g., compute, storage, security, artificial intelligence [AI], analytics, etc.) to enterprise customers. According to CBRE, large hyperscalers remain the biggest users in the North American data center market, where the total “demand for capacity has tripled year-over-year in 1H 2022 as companies continued to shift toward hybrid cloud environments in a post-pandemic world.”
- Bitcoin and cryptocurrency data centers are gaining in popularity, especially in the U.S., given the bans on cryptocurrencies and cryptocurrency mining overseas. The extreme hardware- and energy-intensive demands of Bitcoin mining require special design considerations to meet the stringent data center operations, IT infrastructure, network, security and uptime requirements. This is happening at a time when colocation providers are focused on introducing more sustainable power and cooling operations.
- Core data centers are owned and operated by a private/public IT organization or housed within a colocation provider in specific metros where businesses primarily exchange data between networks, clouds, XaaS providers and enterprise digital infrastructure.
- Edge data centers can also be owned and operated by a private/public IT organization or housed within a colocation provider in specific metros. They are primarily used to bring IT infrastructure closer to employees, customers and partners, and are on the rise with enterprises and service providers.
Software-defined technologies are transforming data centers for the better
In addition to different data center models, smart digital technologies are revolutionizing data center services orchestration, from computing and storage to networking and data center infrastructure management (DCIM). Many critical data center functions, such as sustainability, are being automated using software-defined AI and machine learning (ML) systems to increase efficiency, reduce costs. Software defined data centers (SDDC) are not only more efficient and economical, but proactive, as AI/ML enhanced IT infrastructure, network, security and power monitoring systems can automatically react to issues in real time before they become costly problems or failures.
Interconnection integrates different models of data center infrastructure
At Equinix, we see our enterprise and service provider customers leveraging colocation and private interconnection to integrate their IT infrastructures deployed at Platform Equinix® across different models of data centers at their digital core and digital edge. Equinix International Business Exchange™ (IBX®) data centers are expanding globally to support customers as businesses turn to digital-first strategies as a source of competitive differentiation. Equinix xScale™ data centers are also expanding globally to support the needs of hyperscale customers who are looking to benefit from high-speed, low-latency interconnection to enterprise digital infrastructure deployed proximate to xScale facilities in Equinix data centers in the same metro area.
Interconnection across our global data center and digital infrastructure platform also integrates our customers’ traditional physical on-premises IT with their digital core, edge and ecosystem infrastructures on Platform Equinix to advance their digital advantage. The sixth annual Global Interconnection Index (GXI) 2023, a market study published by Equinix, predicts that: “By 2026, 80% of G2000 companies will be digital leaders, interconnecting with 4+ hyperscale providers and 30+ SaaS/business partners, on average.” Software-defined interconnection from Equinix, such as Equinix Fabric™ and Network Edge, is the glue that binds digital infrastructure and ecosystems across various data center models.
Putting sustainability within reach
Most enterprise and government data centers cannot meet the high standards of today’s or future sustainability objectives (i.e., carbon neutrality), especially on a global scale. This is where companies can benefit from our commitment to protect, connect and power a more sustainable digital world. At Equinix, we design, build and operate our data centers with high energy-efficiency standards and a long-term goal of using 100% clean and renewable energy for our global platform. In 2021 we achieved 95% renewable coverage for our global data center energy consumption, with over 200 sites covered with 100% renewable energy. Companies around the world can drive their business advantage by leveraging Equinix data center sustainability.
One thing is certain: data center models, technologies and methodologies will continue to evolve. At Equinix, we will continue to innovate our global digital infrastructure platform to make our IBX and xScale data centers the most reliable, scalable, secure and sustainable for our customers.
Learn more by reading the Leaders’ Guide to Digital Infrastructure.
 Network World, “What are data centers? How they work and how they are changing in size and scope,” by Jeff Rochlin, August 24, 2022.
 Data Center Knowledge, “The Pandemic Is Laying Waste to On-prem Data Centers,” January 21, 2022.
 IDC, “IDC MarketScape: Worldwide Datacenter Colocation and Interconnection Services 2021 Vendor Assessment,” by Courtney Munroe, June 2021, IDC #US46746121.
 CBRE, “Record Demand Fuels H1 2022 Surge in North American Data Center Development,” August 8, 2022.