It is pretty safe to say that colo is in a state of flux, with increasing competition from cloud alternatives. However, a great many clients and data center operators seem to be settling into a more intermediate-term hybrid IT reality.
While our company focuses more on building scalable, predictable revenue generation systems, and leaves industry analysis to industry analysts, it is not surprising when some investment decisions for marketing automation and sales enablement come down to industry growth forecasts.
We fielded a question around this same theme during the Inbound Sales Acceleration Webinar for Colocation Data Centers. You can find a short excerpt in this blog post.
Is Colo No Longer Viable?
“With everyone thinking cloud… is colo dead?”
Why do I think the person who submitted this question works for a company that only sells cloud services?
With Amazon, Google, and IBM controlling well over half of U.S. cloud market share, there is consolidation that is going on. If you speak with industry analysts, you will find that cloud is fueling an enormous amount of demand in the data center space.
All of the security breaches are fueling a tremendous amount of growth in the colo space. The cost of power, cooling, staff, and the scarcity of staff are all factors fueling much growth in the colo data center space.
The State of Colo
While we are not research analysts, we read many of the same data center trade publications as you.
There are research firms where analysts spend tens of thousands of hours each year crunching these numbers to give you more specifics; the general trend we see is that the market is still extremely healthy.
The colo market is also extremely fragmented, and there's going to continue to be consolidation.
There has been a lot of mergers and acquisitions (M&A’s) in the colo space in recent months, and we expect that to continue. Is the market for colo services no longer viable? Far from it. In fact, it may be healthier than ever.
Colo Pricing Pressures and the Value of Being Found Early in the Buyer’s Journey
From a gross revenue perspective down to the bottom line, is there going to be margin pressure? Yes, there are a lot of data center executives – especially small, locally-based operators – that resort to price competition.
The sooner you can attract people to your sales funnel – relative to the overall buyer’s journey – the sooner you intercept them with your thought leadership.
You also have the ability to:
- Explain your unique value proposition
- Achieve trusted advisor status
- Not resort to price discounting.
Where do you see the colo market headed? How is your company preparing for that forthcoming reality? Let us know in the Comments.
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