Editor’s Note: This blog was originally published in October 2022. It has been updated to include the latest information.
The role of data centers in global business is evolving. Demand for AI and hyperscale cloud workloads continues to increase, and many enterprises recognize they can’t support those workloads using conventional private data centers alone. As a result, they’re using different types of data centers in different places, often with help from third-party service providers.
The basic definition of a data center hasn’t changed over the years: A data center is any facility where a business or third-party provider houses IT infrastructure and all the systems, networks, applications, and overhead (space, power, cooling, racks, cabinets, cabling, etc.) needed to keep that equipment running. However, as we’ll explore in this article, various data center flavors have come online, expanding the market’s conception of where IT infrastructure can live.
Making sense of today’s evolving data centers
Data centers will continue to evolve as technology advances. Traditional varieties will become less important, while new ones will receive more attention—and more investment. Below, we’ll provide some examples from the data center landscape as we know it today.
On-premises data centers
An on-premises data center is owned and operated by an organization to house its own IT infrastructure. Operating on-premises data centers can be expensive and complex, and they don’t scale with the same agility that cloud services do. For this reason, many enterprises are looking to expand beyond on-premises data centers—or replace them altogether.
A report from Synergy Research Group found that as colocation and hyperscale data centers continue to grow, the share of total data center capacity represented by enterprise on-premises data centers is shrinking. In 2017, on-premises data centers accounted for about 60% of global data center capacity; by 2027, Synergy predicts that this figure will drop to under 30%.[1]
Colocation data centers
Colocation data centers are owned and operated by independent service providers. As the name implies, they’re designed for multiple organizations to locate their IT infrastructure in the same facility. Enterprises can lease space, power, cooling, and data center management and support services inside colocation data centers. In some cases, colocation data centers also serve as interconnection hubs, allowing enterprises to connect quickly to business partners and service providers while ensuring low latency.
Increasingly, both traditional IT organizations and newer cloud-native companies are using colocation data centers with digital infrastructure services to run and scale their global IT operations more efficiently. 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.
The expense and complexity of managing digital infrastructure has evolved as a major challenge of enterprises and IT providers alike. As companies consolidate internal data centers, they will continue to look to third-party colocation providers as strategic partners for efficient geographically dispersed digital infrastructure. This latter facilitates connectivity to cloud providers and network providers, as well as peering with internet service providers.”- Courtney Munroe, Research VP, IDC [2]
Hyperscale data centers
Hyperscale data centers are designed to meet the needs of large cloud or IT service providers such as AWS, Microsoft, Google and Meta. They can be owned and operated by the hyperscaler themselves, or by a service provider. Some colocation providers—including Equinix—also have a hyperscale portfolio. What separates these hyperscale data centers from traditional colocation data centers is their massive size. They’re typically 10,000 square feet or more, and customers use them to support their largest workloads.
As demand for high-capacity workloads like cloud computing, big data analytics and AI continues to grow, the hyperscale data center market appears set to grow with it. One recent report predicts that the value of the global hyperscale data center market will increase 24.7% CAGR between 2024 and 2032.[3]
Bitcoin and cryptocurrency data centers
Data centers that are used to mine cryptocurrencies need to meet extreme hardware and energy demands, as well as network, security and uptime requirements. While crypto mining data centers gained popularity in recent years, some firms may now be looking for ways to hedge against the potential volatility of cryptocurrencies.
Data Center Knowledge recently reported on a trend of Bitcoin miners pivoting into AI, bringing with them the power and GPUs they once used for mining.[4] This is happening at a time when colocation providers are focused on introducing more efficient power and cooling operations to enable a more sustainable approach to AI.
Core data centers
A core data center can be any data center deployed in a specific strategic metro for the purposes of exchanging data between networks, clouds, other service providers and enterprise digital infrastructure. From a technical perspective, it’s not a distinct variety of data center, since both on-premises and colocation data centers can fulfill this role. Instead, they’re defined by where organizations deploy them and how they use them.
Edge data centers
Like core data centers, edge data centers can be on-premises or colocation. They’re also deployed in specific metros—in this case, the metros with high densities of employees, customers and partners. Enterprises and service providers are increasingly using edge data centers to deploy IT infrastructure in proximity to their end users, thus enabling them to support emerging use cases that require extremely low latency.
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 systems to increase efficiency and reduce costs.
Software-defined data centers (SDDCs) are not only more efficient and economical, but also more proactive. AI-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 using colocation and private interconnection to integrate their IT infrastructure across different models of data centers, at both digital core and digital edge locations.
Equinix IBX® colocation data centers are expanding globally to support customers as they turn to digital-first strategies as a source of competitive differentiation. Equinix xScale® hyperscale data centers are also expanding globally to support the needs of our hyperscale customers. Our hyperscale facilities are typically located near our colocation facilities in the same metros, thus making it quick and easy for hyperscalers to access digital infrastructure services. Also, our enterprise colocation customers often benefit from low-latency access to the hyperscalers’ services.
Interconnection across our global data center and digital infrastructure platform can also help our customers integrate their on-premises IT with their digital core, edge and ecosystem infrastructures to expand their digital advantage. Equinix Fabric® software-defined interconnection and Equinix Network Edge virtual networking services can help bind together digital infrastructure and ecosystems across various data center models.
Putting sustainability within reach
Most enterprise and government data centers struggle to meet sustainability objectives, especially on a global scale. This is where organizations 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 2023, we achieved 96% renewable coverage for our global data center energy consumption, with more than 230 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 as reliable, scalable, secure and sustainable as possible for our customers.
Learn more by reading the Leaders’ Guide to Digital Infrastructure.
[1] On-Premise Data Center Capacity Being Increasingly Dwarfed by Hyperscalers and Colocation Companies, Synergy Research Group, July 12, 2023.
2]IDC Vendor Profile: Equinix Experiences Strong Growth Driven by AI, Hyperscale, and Digital Infrastructure, Courtney Munroe and Avinash Naga, May 2024, IDC #US50186623.
[3] Hyperscale Data Center Market Size, Share & Industry Analysis, Fortune Business Insights, June 24, 2024.
[4] Andy Patrizio, Bitcoin Miners Pivot to Data Center Operations Amid AI Boom, Data Center Knowledge, May 30, 2024.
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