451 Research Case Study

Demand-Driven Business Expansion Planning



Learn how a leading European colocation provider was able to prioritize its operating footprint expansion plans and investment into city locations with an identified and underserved latent demand.

Services Used

Commissioned Research

The Challenge

A colo provider with facilities across the DACH (Germany, Austria, Switzerland) region was looking to expand into new territories in southern and western Europe. The company was not as familiar with the buy/supply-side issues facing the major metro providers in these regions, and the executives knew that they must have an informed view of the latest market position, visibility into emerging competitive pressures, and a good level of confidence in the city level site selection process and potential market entry before solidifying their expansion plans. Because 451 Research actively tracks the colocation and hosting datacenter markets across Europe, our Advisory team was selected to provide the necessary market guidance.

The Solution

Utilizing our existing research on the market, together with the industry touchpoints we have, we were able to provide a comprehensive view of this market. Our team got to work with an 8-week long study, exploring the trends and indicators of the demand-side of the retail MTDC datacenter colocation and hosting services sector in each of several target cities. The aim was to expose the prevailing and emerging competitive supply-side dynamics that our client might experience, should it progress with datacenter build investments in any or all of the cities.

For one target city, 451 Research was already tracking 27 providers and 53 multitenant datacenter facilities within a 40-mile radius of the city. Seen as a key trade hub, with a large pool of skills, this city is home to some high quality facilities with a high concentration of fiber offering connectivity to London/US and the rest of Europe. We found that the city has some power problems. On the plus side, the city offered a wide range of internationally focused service providers, which accounted for more demand than local enterprises could handle.

A second target city, known for its heritage-listed buildings and streets, has strict urbanism laws restricting building activity - especially in regards to the height and the distribution of buildings, and the challenges of laying fiber and ducts. Those already in the market cited difficulty in locating suitable datacenter sites: connectivity is not as strong outside of the city, and land is scarce in the city. Power can also be difficult to obtain at the larger end of the scale. Many providers also complained about energy pricing and feared that deregulation in the energy industry would further add to pricing woes. On the plus side, we identified quantifiable demand from local businesses, or international companies with local divisions, and found that 30% of hosting providers planned to expand their presence using third-party datacenters.

The Results

By providing context and the latest market insights on the status of the DC market's key criteria, assessments of principal competitors and the competitive landscape, pricing trends and indicators, and information about connectivity routes and the state of the carrier market, the client was able to inform its business planning process to ensure it made the best and most strategically valid DC investment possible.

Is your organization facing a similar challenge? Let's talk.