Modular data centers offer a flexible and scalable infrastructure solution to businesses looking to deploy their IT infrastructure in a cost-effective manner. These data centers are assembled using standardized building blocks that can be customized as per specific application requirements. Modular data centers provide advantages such as reduced deployment time, plug-and-play functionality, ease of relocation and lower upfront costs as compared to tradition on-site build data centers. As enterprises plan to modernize their data center infrastructure, manage variable workloads, and focus on decentralized IT infrastructure, the demand for modular data centers is growing.
The global modular data center market size was valued at US$ 18.49 billion in 2023 and is expected to reach US$ 87.65 billion by 2030, grow at a compound annual growth rate (CAGR) of 24.9% from 2023 to 2030.
Key Takeaways
Key players operating in the modular data center market are Huawei Technologies Co., Ltd., International Business Machines (IBM) Corporation, Dell Technologies Inc., Hewlett Packard Enterprise Development LP, Eaton, Rittal GmbH & Co. KG, Vertiv Group Corp., Schneider Electric, IO Data Centers LLC, Baselayer Technology LLC.
The Modular Data Center Market provides opportunities for growth for providers through deployment of scalable and edge computing infrastructure solutions for industries. Edge and telecom companies are investing heavily in fifth generation (5G) networks to enable smart city initiatives which requires establishing modular data centers closer to end-users and networks.
Modular data center solution providers are focusing on expanding their global presence. For instance, in 2021, Dell Technologies partnered with Telefonica to deploy a modular data center in Latin America. Similarly, Hewlett Packard Enterprise has collaborated with M1 Limited to install micro modular data center in Singapore. The rising demand for localized infrastructure presents growth prospects for established as well as new entrants in international markets.
Market drivers Rising demand for scalable, flexible and deployable data center infrastructure solutions. Modular data centers allow infrastructure to scaled up or down as per changing IT requirements. Need for localized infrastructure due to growth of edge computing and 5G implementation. Modular data centers can be easily redeployed close to endpoint users and network edges.
Market restrain
Higher initial set up and deployment cost compared to tradition data centers. However, modular approach helps lower total cost of ownership over time. Stricter regulations around modular building standards and certifications in some countries. This increases compliance cost for solution providers.
Segment Analysis
The modular data center market can be segmented based on Component, Data Center Size, and Industry Vertical. Based on the component, the modular data center market is segmented into Functional Module Solutions and Services. The Functional Module Solutions segment dominated the market as modular designs offer significant advantages over convention data centers such as plug-and-play functionality, quick deployment, scalability, and energy efficiency. By data center size, the market can be segmented into Mid-sized Data Centers, Enterprise Data Centers, and Large Data Centers.
The Enterprise Data Centers segment dominated as modular designs fulfill the growing demand for energy efficient data center solutions from small and medium enterprises. Based on industry vertical, the market is categorized into BFSI, IT and Telecom, Government and Defense, Healthcare, Retail, Energy, Manufacturing, and Others. The IT and Telecom segment accounted for the largest share as this industry generates huge amounts of data and requires modular and scalable data center solutions.
Global Analysis
The modular data center market is dominated by North America followed by Europe and Asia Pacific region. This is attributed to rapid digitization across end-use industries such as BFSI, IT and telecom in these regions. North America accounted for the largest market share as the region is an early adopter of advanced technologies such as modular data centers. The market in Asia Pacific is expected to grow at the highest CAGR during the forecast period owing to substantial investments by hyperscalers and increase in the development of new data centers in major Asia Pacific countries including China, India, Indonesia, and Japan. Growing demand for energy-efficient data centers in APAC region and government initiatives to attract data center investment will continue to drive the regional market over the coming years.
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