Do Michigan Colocation Providers Face Cloud Competition?

No matter where you look in the world, when it comes to data colocation, the competition is heating up. On top of that, there are the giants like Google and Amazon Web Services and smaller companies all competing for the same growing market by offering cloud computing services. Michigan colocation is no different with 44 data colocation centers (spread across eight areas) located in the state and rising. The highest concentration is in Detroit with 24 colocation centers. But are these data centers in decline?

If you search around the web, it may give you the impression that colocation centers face competition from cloud service providers. But the truth is just the opposite (even though Mad Money’s Jim Cramer claimed that it was a dying industry). The colocation is in fact booming across the globe and the demand is expected to double and triple over the coming years.

When it comes to Michigan colocation, the state is a safe bet to store your information. The state has a naturally cool climate (free cooling for most of the year) and is located at an extremely low peak ground acceleration point making it a low-risk earthquake zone. Further, although it’s located in the Midwest, it has a significantly lower risk of damage from hurricanes and tornadoes.  

Cloud Computing in Michigan

Cloud-based computing has become quite complicated over the years and these days, even the government has got involved. Recently, the Michigan Court of Claims determined that remotely accessed software was not subject to tax in the state. So that makes cloud computing transactions free of sales and use tax. As a result, services can become cheaper as companies servicing Michigan review what transactions are being taxed at present.

The many variables that affect placement and pricing around the state will keep evolving to best suit the customer’s needs. Although moving to the cloud might become cheaper, Michigan colocation is expected to continue to grow.

Cloud and Colocation are Intertwined

This year has seen a trend of enterprise data colocation centers and cloud services all becoming intertwined. Companies are actively moving a lot of their IT workloads onto clouds reducing their own potential expenses at their own data centers. As a result, the growth of the cloud is driven by the growth of colocation. This puts colocation in a peculiar but interesting middle ground.

When it comes to retail colocation, the money is generated by several content providers and service providers (cloud and IT). The country is currently split 60% service providers and 40% enterprise. As a result, all these variables drive consolidation of data centers to expand a firm’s regional footprint and to obtain complementary cloud and service options.

Although cloud service providers are expanding their global footprint, it hasn’t affected Michigan colocation or colocation in any specific area. A lot of companies prefer to keep their data close by making the impact of Google and AWS insignificant. The giant clouds are growing, but not at the expense of local and private clouds. They will continue to do this through VARs, systems integrators, and service providers.

Has your company just transitioned to a cloud? Let us know about your experience in the Comments box below.

And if you’re responsible for attracting new colocation clients in Michigan, be sure to download your free copy of the eBook “Lead Generation Best Practices for Colocation Data Centers.”