Data Center Market in the UK to Grow by USD 37.87 Billion (2024-2028), Multi-Cloud Adoption and 5G Network Upgrades Drive Growth, Report on AI Transformation - Technavio

NEW YORK, Jan. 24, 2025 -- Report with the AI impact on market trends - The data center market in UK size is estimated to grow by USD 37.87 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 21.8% during the forecast period. Growing adoption of multi-cloud and network upgrade to support 5G is driving market growth, with a trend towards consolidation of data centers. However, increasing power consumption poses a challenge. Key market players include Amazon.com Inc., arkdatacentres.co.UK, Baxtel, Cisco Systems Inc., CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., DXC Technology Co., Equinix Inc., Switch Ltd., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., International Business Machines Corp., Iron Mountain Inc., Microsoft Corp, Nippon Telegraph and Telephone Corp., Oracle Corp, SAP SE, Verizon Communications Inc., and Virtus.

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Market Driver

The UK data center market is experiencing significant growth, driven by trends such as cloud computing, multi-tenant data centers, and the increasing importance of big data, IoT, eCommerce, and digital content. Businesses of all sizes, from large enterprises to small businesses, are undergoing digital transformation, leading in demand for data center solutions. Remote working and the rollout of 5G networks are also fueling the need for data transmission and edge computing. Hyperscale data centers, micro data centers, and colocation services are popular choices for companies seeking scalability and energy efficiency. Emerging technologies like artificial intelligence, machine learning, and automation require high-performance computing and data storage. Hybrid cloud solutions, green data centers, and eco-friendly solutions are also gaining traction. Industries like IT & telecom, healthcare, manufacturing, and cybersecurity are major consumers of data center services. Colocation service providers and hyper-scale operators are meeting this demand with modular data centers, prefabricated solutions, and interconnection platforms. Data security remains a top priority, with server storage devices and networking equipment playing crucial roles in protecting digital data. The market is expected to continue growing, driven by the increasing importance of real-time processing and low-latency applications. 

Data center consolidation is a cost-saving measure increasingly adopted by enterprises in the UK. High operational expenses due to power consumption and carbon emissions are driving the need for consolidation. Consolidation offers significant benefits, including cost savings of up to 30%, enhanced security up to 35%, improved efficiency by 50%, and reduced power consumption by 55%. This trend began a few years ago, with National Grid choosing Wipro for data center consolidation and next-generation hybrid cloud implementation in 2021. Enterprises are consolidating by merging existing facilities, moving to colocation data centers, and adopting cloud services. 

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Market Challenges

• The UK data center market is experiencing significant growth due to the increasing demand for cloud computing, multi-tenant data centers, and digital transformation. Businesses of all sizes, from large enterprises to small businesses, are adopting cloud solutions for their eCommerce platforms, digital content, and remote working needs. The rise of the Internet of Things, 5G networks, and edge computing is driving the need for hyperscale data centers and micro data centers. Challenges include managing data transmission, energy efficiency, and data security in physical data centers. Colocation service providers and hyperscale operators are offering hybrid cloud solutions, green data centers, and eco-friendly solutions to address these challenges. The market is also seeing an increase in the adoption of artificial intelligence, machine learning, and automation. Sectors like IT & Telecom, healthcare, manufacturing, and cybersecurity are leading the way in the adoption of data centers. The market is expected to grow further with the integration of generative AI, deep learning, and high-performance computing in data storage and networking equipment. The demand for low-latency applications and real-time processing is driving the growth of edge data centers. Overall, the UK data center market is a dynamic and evolving landscape that is essential for businesses to navigate in today's digital world.
• The data center market in the UK is experiencing substantial growth due to increasing data traffic from Internet penetration, social media usage, automation technologies, smart city initiatives, and AI adoption. Servers and cooling solutions account for a significant portion of electricity consumption in data centers, which is a concern given the UK's power production and consumption gaps. As numerous enterprises operate large-sized data centers and millions of users require continuous power, high energy consumption leads to increased operational costs and environmental concerns such as carbon emissions.

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Segment Overview

This data center market in UK report extensively covers market segmentation by 

1. Component 
   • 1.1 IT infrastructure
   • 1.2 Power management
   • 1.3 Mechanical construction
   • 1.4 General construction
   • 1.5 Security solutions
2. Geography 
   • 2.1 Europe

1.1 IT infrastructure- The UK data center market is experiencing significant growth due to the increasing demand for computing power and storage to support the expansion of data traffic. Enterprises in the country are shifting towards cloud technologies, leading to a rise in investments in hyperscale data centers (HDCs). For instance, SAP SE's investment of USD283.37 million in the UK for the launch of SAP UK data cloud is an indication of this trend. HDCs offer advantages such as high scalability, cooling efficiency, and workload balancing, making them suitable for both public and private sectors. The COVID-19 pandemic has further accelerated the adoption of cloud services and digitization, increasing the need for advanced IT infrastructure. The data center IT infrastructure segment includes server infrastructure, storage infrastructure, software-defined data center (SDDC), network infrastructure, converged infrastructure, data center automation software, data center backup and recovery software, and DCIM solutions. The server infrastructure supports the processing of data, while storage infrastructure facilitates the storage and retrieval of data. SDDC is a virtualized data center environment that allows for centralized management and automation of IT resources. Network infrastructure ensures seamless communication between different components of the data center. Converged infrastructure integrates multiple IT components into a single solution, reducing complexity and increasing efficiency. Data center automation software streamlines IT operations, while backup and recovery software ensures data protection. DCIM solutions provide centralized management of IT assets and resources. These factors are expected to drive the growth of the data center market in the UK during the forecast period. The market is expected to witness significant investments in server and storage infrastructure to support the increasing demand for cloud services and digitization. The rise in the number of HDCs is also estimated to create demand for other IT infrastructure and related solutions.

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Research Analysis

The Data Center market in the UK is experiencing significant growth due to the increasing adoption of cloud computing, multi-tenant data centers, and digital transformation. Businesses across industries are leveraging cloud services for their operations, leading in demand for data center infrastructure. Big data, IoT, eCommerce, digital content, and remote working are some of the key drivers fueling this growth. 5G networks are set to revolutionize the data center landscape by enabling faster data transfer and lower latency. Physical data centers continue to coexist with cloud data centers, colocation, and hyperscale facilities. Electrical and mechanical infrastructure are crucial components of data centers, ensuring the reliable operation of server storage devices, networking equipment, and digital data. Data security is a top priority, with generative AI and deep learning playing a vital role in threat detection and prevention. High-performance computing, data storage, hybrid cloud, and multi-cloud are other key trends shaping the UK data center market. Data Center Rating provides an important framework for evaluating the efficiency and sustainability of data centers. Corporate data centers are also adopting advanced technologies to optimize their operations and reduce costs.

Market Research Overview

The Data Center market in the UK is experiencing significant growth due to the increasing demand for cloud computing, multi-tenant data centers, and digital transformation. Big data, Internet of Things, eCommerce, digital content, and remote working are driving this growth. The adoption of 5G networks and edge computing is also increasing, leading to the development of micro data centers and hyperscale data centers. Energy efficiency and eco-friendly solutions are becoming essential, with a focus on asset performance management and green data centers. Tier 3 data centers are popular among large, medium, and small enterprises, as well as colocation service providers and hyper-scale operators. Data security is a top priority, with a need for server storage devices, networking equipment, and digital data protection. The market also includes generative AI, deep learning, high-performance computing, and data storage solutions for industries such as IT & Telecom, healthcare, manufacturing, and cybersecurity. Hybrid cloud, multi-cloud, and interconnection platforms are also gaining popularity for their ability to provide low-latency applications and real-time processing. Modular and prefabricated data center solutions are also becoming increasingly common due to their flexibility and scalability.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Component
  • IT Infrastructure
  • Power Management
  • Mechanical Construction
  • General Construction
  • Security Solutions
• Geography
  • Europe

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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