The German data center market was valued at USD 5.63 billion in 2020, and it is expected to reach USD 7.33 billion by 2026, registering a CAGR of 4.69% during the forecast period (2021-2026). Big data and IoT technology will increase investments in the data center market as enterprises in Germany are observing high data generation across industries, such as BFSI, IT and Telecom, Healthcare, and Government and Defense.
- The implementation of the General Data Protection Regulation (GDPR) also acts as a driver for data center investment and regional cloud network development in Germany. For instance, Microsoft opened its cloud region in Switzerland (2018), Germany (2019), and is planning to open a cloud region in Norway (2020).
- Similarly, Google has announced to open a cloud region in Frankfurt, Germany, in 2020. Hence, the implementation of data protection and privacy policies in Europe will contribute to the global data center market growth.
- The COVID-19 pandemic has resulted in a subsequent need to enforce social distancing in response to the lock-down. Due to this, there is a real drive across the public sector in Germany to shift from traditional channels to digital channels to enable citizens, businesses, and public sector staff to access public services and securely share data from remote locations. The COVID-19 Coronavirus crisis has reinforced the importance of data centers and what they do. Also, demand for cloud services is soar in some sectors but wither in other verticals as they shift into survival mode. All the above factors are enablers for the steady growth of the market in the short term as well as long time.
Key Market Trends
Increase in Colocation and Hyperscale Investments To Drive the Growth
- The primary factor driving the growth of data centers in Germany is the increased investment by colocation service providers in the Europe colocation market. The increasing cloud service providers and the information technology industry is boosting the data center market in Germany.
- An increase in data generation every year is forcing many companies to double their on-premise storage from time to time. More companies are opting for the data center as it addresses their storage issues without substantial upfront costs.
- Companies have big-budget, and those who need more space for storing data are going for wholesale data center colocation. For instance, Vantage acquired Etix to expedite wholesale data center capacity delivery for hyper-scale and enterprise customers looking to expand in Frankfurt. The company is planning to invest USD 2 billion across five markets in Europe, including a "crown jewel" 55MW greenfield campus under construction in Offenbach, Germany, just outside of Frankfurt.
- The rising number of smart hospitals in Germany owing to rising investments in digital healthcare infrastructure in the country, increasing investments in communication and technology is also boosting the market growth of data center colocation in Germany.
Growing IT Infrastructure to Fuel the Market Growth
- Germany is the fifth-largest digital economy in the world. Over 80% of enterprises in the manufacturing sector in Germany plan to digitize their value chain by 2024. Increased digital economy initiatives along with factors such as high industrial tech spend and growth in smart cities initiatives, are leading to increased edge data center deployment
- Public cloud services dominate the data centers market in Germany. Government agencies are grown by private cloud services as they plan to make greater use of cloud services in public administration during the forecast period. However, hybrid cloud services have more substantial growth potential than private and public cloud services.
- The increased adoption of Big data and IoT technology across various industries in Germany led to high data generation across the region. Such trends are creating a need for efficient IT infrastructure to manage the enormous amounts of data and thus provides growth opportunities for the data center market in Germany. Berlin, Hamburg, and Munich are the leading three smart cities in Germany using IoT for business and commercial purposes.
- Over 80% of enterprises in the manufacturing sector in Germany plan to digitize their value chain by 2024. Increased emphasis on digitization from connectivity to data and service architectures is also leading to increased growth of data centers in Germany. However, the high cost associated with data centers acts as a hindrance to the growth of the market.
The German data center market is highly concentrated due to higher initial investments and low availability of resources, which present challenges to this market. Some of the key players in the market are Cisco Systems Inc., IBM Corporation, and Huawei. Some recent developments in the market include:
- In February 2020, Huawei launched the Intelligent Data Center Service Solution at the Industrial Digital Transformation Conference 2020. This service can help customers design, build, and operate the world's high-reliability (Tier-4), green, and intelligent data centers. With the aid of Artificial Intelligence, Power Usage Effectiveness (PUE) can be reduced by 8%-15%.
- In December 2019, IBM expanded the availability of IBM Power Systems Virtual Servers on IBM Cloud to IBM Cloud data center in Germany. In addition to Washington, DC, and Dallas, TX, the company's AIX and IBM i users can now provision in Frankfurt, Germany.
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1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
4.1 Market Overview
4.2 Industry Value Chain Analysis
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Bargaining Power of Suppliers
4.3.2 Bargaining Power of Consumers
4.3.3 Threat of New Entrants
4.3.4 Threat of Substitutes
4.3.5 Intensity of Competitive Rivalry
4.4 Market Drivers
4.4.1 Regulations driving Cloud Investments
4.4.2 Growth in Colocation and Hyperscale Investments
4.4.3 Usage of Lithium-ion Batteries and Fuel Cells in Data Centers
4.5 Market Restraints
4.5.1 Lack of Skilled Workforce
4.5.2 Increase in Power Outages and Fluctuations
4.6 Assessment of Impact of Covid-19 on the Industry
5 MARKET SEGMENTATION
5.1 IT Infrastructure
5.2 Electrical Infrastructure
5.2.1 UPS Systems
5.2.3 Transfer Switches and Switchgears
5.2.4 Rack PDU
5.2.5 Other Electrical Infrastructure
5.3 Mechanical Infrastructure
5.3.1 Cooling Systems
5.3.3 Other Mechanical Infrastructure
5.4 Tier Standards
5.4.1 Tier I and II
5.4.2 Tier III
5.4.3 Tier IV
5.5.1 Enterprise Data Centers
5.5.2 Managed Services Data Centers
5.5.3 Colocation Data Centers
5.5.4 Cloud Data Centers
5.6 End User
5.6.2 Telecom and IT
5.6.5 Other End Users
6 COMPETITIVE LANDSCAPE
6.1 Company Profiles
6.1.2 Arista Networks
6.1.3 Broadcom Inc.
6.1.4 Cisco Systems
6.1.5 Dell Technologies
6.1.6 Hewlett Packard Enterprise
6.1.8 IBM Corporation
6.1.10 Arup Group
6.1.11 Callaghan Engineering
6.1.12 Etix Everywhere
6.1.13 Lupp Group
6.1.15 Eaton Corporation
7 INVESTMENT ANALYSIS
8 MARKET OPPORTUNITIES AND FUTURE TRENDS
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.