Market Trends of Europe Data Center Rack Industry
IT and Telecom to have significant market share
- The cloud, media and entertainment, telecom, and government end-user industries are expected to drive significant demand in the region. The demand for cloud services is promising in Denmark, Sweden, the United Kingdom, Germany, and other developed countries. The need for cloud solutions continues to grow in Denmark, and the demand for cloud-based data protection and backup solutions is expected to get more robust. In June 2022, Keepit, a cloud backup service with headquarters in Copenhagen, raised USD 22.5 million in debt financing from Silicon Valley Bank (SVB) in association with Vaekstfonden.
- European companies are utilizing OTT in a variety of innovative ways. On average, adults in the United Kingdom watch 35 online videos per week, and most UK adults (68%) watch videos online daily (2,000 people in the United Kingdom were surveyed in July 2022). Social network user numbers are climbing in every Western European country. Still, the United Kingdom is anticipated to be the largest single market in 2023, with 43.9 million users, followed by Germany (41.1 million) and France (38.2 million).
- The rapidly increasing 5G wave is motivating telecom vendors to invest in the European data center market. Recently, Swedish network provider Net4Mobility, a joint venture between local carriers Tele2 and Telenor, announced plans to connect 90% of the nation's population to its 5G network by the end of 2023. Among government end users, the eGovernment Benchmark evaluates the provision and delivery of eGovernment services in 35 countries across Europe, the 27 EU member states, and Iceland, Norway, Switzerland, Albania, Montenegro, North Macedonia, Serbia, and Turkey. The market share of the abovementioned end-user industries is anticipated to record growth over the forecast period.
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FLAP-D ( FRANKFURT, LONDON/SLOUGH, AMSTERDAM, PARIS, AND DUBLIN) to have greater market share
- The largest data center markets are covered by FLAP-D metro markets (including Frankfurt, London/Slough, Amsterdam, Paris, and Dublin). With the increasing adoption of digital services and power management, these countries are expanding their colocation facilities. In August 2022, the Greater London Authority announced plans to change the application process for data center development to tackle and ease the West London power crisis with better electricity management regulations.
- The land price in London is around USD 150 per sq. ft. The higher land cost in London is expected to shift investments to other cities in the industry with lower land prices. For instance, Amsterdam has a lower land price for building facilities in the FLAP-D data center market, which is USD 38 per sq. ft. The Spanish market has many third-party DC projects under construction, with facilities being developed in Madrid and Barcelona.
- In terms of renewable energy, in the FLAP-D market, renewable energy is majorly produced from solar, wind, hydroelectricity, marine and wave energy, and bioenergy. For instance, in April 2022, the French government announced a strategy for renewable energy innovation projects as per its 2030 national investment plan, with an investment of over USD 1 billion.
- As the FLAP-D data center hubs observe a lack of land availability and skilled workforce, they are under threat from emerging regions. Countries like Italy, Poland, Belgium, and Sweden are expected to showcase growth in the future. Sweden's data center market is one of the most connected locations in the Nordic region regarding subsea cable connectivity. The country has adopted the district heating concept for data centers.
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