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U.K. Data Center Colocation Business Growing

U.K. companies are investing in data center colocation facilities to meet growing demand, as IT departments lean more on cloud computing.

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As more companies move to the cloud to expand their IT capabilities, the effect on storage requirements has been vast, causing companies to increasingly call on external data center services, including colocation options.

U.K. Trade & Investment claims that the annual market value of the U.K.'s cloud computing market will grow from £2.4 billion to £6.1 billion by 2014 (equivalent to $9.8 billion), and that by 2015 half of all new IT spending by the public sector will be on public cloud services. This in turn is putting pressure on storage capacity.

In response, the U.K. data center market -- the largest in Western Europe -- is currently investing in its facilities at a rate of around $3 billion a year, according to various analyst estimates, with only the U.S. investing more. Market watcher DatacenterDynamics has calculated that, at the last count, the U.K. boasted more than 7.6 million square meters (nearly 25 million square feet) of data center space.

In December, cloud analyst firm 451 Group predicted a healthy colocation and wholesale data center market in 2013, with growing use of multi-tenant data center space.

[ Services firms are trying to cash in on Windows migration slackers. See Windows XP Stalwarts Boost Services Business In U.K.. ]

Explaining the drivers for renting space in a shared storage facility, Edward Jones, CEO of U.K. property development company PMB Holdings, noted that the cost of constructing a new data center in Europe now runs more than $30 million, representing a risky and unaffordable proposition for many companies. PMB is currently overseeing construction of the MK DataVault, a new colocation data center in Milton Keynes, northwest of London, where businesses will have the option to have facilities tailored to their specific requirements.

"Expense always plays a large role in strategic IT investments, and the ongoing economic instability around the world has made companies even more wary of large investments," Jones said. "Many businesses will have stuck to an 'if it isn't broken, don't fix it' attitude to their data storage over the years. Although the economy remains a concern for most companies, the growing number of data centers has brought greater choice and flexibility, making it easier to invest. Likewise, more flexible contracts and financial terms are helping more companies get involved."

Aside from the cost benefits of using an external service, data center ownership is also a much riskier strategy that leaves far less flexibility and room for error, Jones added. "A company building a smaller and more affordable center might find their demand outstripping it before long, while a large and expensive facility could become a costly white elephant if demand and growth don't live up to expectations. Renting space in a flexible data center offers a more viable solution with far less risk."

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